Gov. Rick Snyder recently introduced a round of options that would, in part, pave the way toward leveraging more dollars to fix roads and bridges, as well as improve transit service.
During his Wednesday, Oct. 26 Special Message at Lawrence Technological University in Southfield, Snyder said that Michigan would require another $1.4 billion to fix a deteriorating infrastructure system, including roads and bridges.
Snyder said $1 billion a year could be raised by tacking on an extra $10 per month on each vehicle registration. More money could be raised annually via legislation authorizing counties and regional authorities to levy up to $40 in vehicle registration fees per vehicle pending voter approval. The revenue stream would then be doled out to that county or region for road repair and bus transit.
“I’m not sure about upping the registration fees — people are really hurting and it would be hard for them to absorb that increase, but we definitely need to do something,” said state Rep. Eileen Kowall (R-Highland, White Lake). “However, it will be interesting to look at allowing local communities to levy their own millage to raise money for roads.”
Snyder said he intends to have public discussions before he moves forward with any formal proposal to the state Legislature.
In addition, Snyder is proposing an overhaul of the state gas tax, currently collected at a flat rate of 19 cents per gallon. The changes would shift taxing gas from the distributor to the wholesaler, and levying it as a percentage based on the price per gallon.
A wholesale tax would allow revenues to vacillate with changing fuel prices rather than tying gas tax revenue to consumption.
“We thought it was fairly positive in some respects like shifting the per-penny price to a percentage at the wholesale level to ensure road funding over time,” said Road Commission for Oakland County (RCOC) Spokesperson Craig Bryson. “One of the flaws with the gas tax is that we never got more than 19 cents so it’s a flat tax, but with the percentage it would gradually go up as fuel (price) goes up.”
Bryson said road funding is “woefully inadequate” and steps need to be taken due to the trend of reducing fuel consumption.
“Reducing fuel consumption is expected to continue, meaning revenues will continue to decrease, so it’s a system designed to fail,” Bryson said. “The new structure would be constant vs. decreasing, but it’s a hard sell to the Legislature.”
“Changing the structure and making it a percentage at the wholesale level is one of the best road funding proposals so far,” Kowall said. “I also like the governor’s idea that most of the funding should go to the most congested roads based on traffic volume.”
The proposal would not be a cure-all and has been tried before without much success.
A hike of an additional $25 in vehicle registration fees per vehicle was knocked down by state voters in the late 1980s.
The RCOC suggested a slight increase in the sales tax, up to 1 percent, to help address traffic congestion.
“That would have generated the most money, but we first need to increase road funding in general for road maintenance by raising the gas tax,” Bryson said.
Snyder noted it’s time to change the way road money is distributed from the state to local governments to address needs rather than through a formula, per se. Currently the distribution formula is set up so that 39 percent of state and federal road funds goes to the state, 39 percent goes to county road commissions and 22 percent goes to cities and villages.
“I continue to be impressed with the governor’s goal to ‘reinvent’ Michigan and get us on stable footing, but I hit the brakes when there’s talk of the gas tax and vehicle registration fees,” said state Rep. Gail Haines (R-Waterford, West Bloomfield). “I would like to see the infrastructure improved but I’m hesitant to ask the taxpayers for a greater burden.”
As another means of restructuring, Snyder thinks it’s time to do away with road commissions, stating they’re “unneeded.” He suggested giving counties the option to usurp control over their road commissions or consolidating them.
“We are the only state in the country that has county road commissions — 81 of them in total — and 35 of those are not accountable to the rest of the county government,” he said.
“Based on the assumption you’d save money by merging with the county government, that would politicize the road project selection and road maintenance decisions,” Bryson said. “If the RCOC must answer to the Oakland County Board (of Commissioners), it could mean they would want an equal number of projects in each district regardless of need.
“We would like to be involved in discussions and share information as to why this isn’t a good idea,” he said.
House Bills 5125 and 5126 were introduced Oct. 26 to allow elected state officials or boards of commissioners to eliminate the autonomy of county road commissions and merge them into the counties’ general government structures.
“The idea could have merit, but there are things we could do on economy of scale,” said Oakland County Commissioner Bob Hoffman (R-Highland). “There are ways to consolidate without absorbing the whole thing.”
Haines said she’s reluctant to take a stand on the bills at this point.
“It’s not a mandate, but an option that has bipartisan support, but I would like to speak with county officials first,” she said.
Both bills are in the hands of the House Transportation Committee.