With gas sailing past $4 a gallon, Michigan drivers are paying much more to travel state highways, yet — in a public policy conundrum — can expect to see fewer resources to fix the roadways they use.
After a surge of spending improved state highway conditions across Michigan a few years ago, the trend lines are headed down again. More weakened bridges. More miles of pavement in less than optimal condition. In January, a House Fiscal Agency briefing for legislators stated bluntly: “MDOT does not have sufficient revenue to either sustain performance goals or complete needed capacity improvement projects.”
Gordon Mackay, president of the Indian Trails bus line that travels all over Michigan, said he thought the major roads were in OK shape right now. He added, however, that he recently encountered the worst stretch of highway he’s ever driven on: “On I-75/U.S. 23 north of Bay City, I was shocked, quite frankly, at how bad it was.”
No doubt other drivers can offer similar tales. And to add insult to injury, rising fuel costs are worsening financial trends that already have state road builders and policy-makers in a jam:
* $1.14 billion. As recently as fiscal year 2003, Michigan’s gas tax earned the state almost $936 million — the single largest source of state money for transportation. For fiscal 2011, the projection is for only $826 million.
But the problem is bigger than the raw numbers reflect. If you take $936 million from 2003 and adjust it for inflation to 2011, you would have about $1.14 billion. In other words, Michigan this year is $311 million below its revenue of just eight years ago. That sum alone would resurface about 150 lane-miles of highway. (A single mile of a four-lane highway such as U.S. 127 in the middle of the state equates to four lane-miles of repair work.)
* 38 percent. In the current budget year, Michigan earmarked $3.23 billion for transportation, including mass transit and aeronautics. Just over 60 percent of that money comes from restricted state accounts, about 38 percent comes from the federal government and just under 2 percent is from local sources. Without the federal money, Michigan would be laying concrete with one hand tied by its back.
Standard federal rules require the receiving state to come up with 20 percent of the cost of a project. Entering the 2012 budget cycle, Michigan was short of revenue to acquire its maximum allotment of federal dollars.
Gov. Rick Snyder struck a deal with Washington, D.C., to use $550 million that Canada would invest for Michigan in the New International Trade Crossing to count toward Michigan’s required match. However, neither the House nor the Senate approved budget bills that included Snyder’s money for the NITC. Instead, legislators voted to fill the gap with so-called “toll credits” based on improvements made to the Ambassador Bridge linking Detroit to Canada. Though the budget is not yet resolved, Michigan expects to get its full allotment of federal road dollars for fiscal 2012.
* 19 cents. That’s the state levy on gasoline. It reached that level in 1997, when it was raised from 15 cents.
“Since 1982, we have had a single 4-cent increase,” said Mike Nystrom of the Michigan Infrastructure and Transportation Association, an industry group. “That’s the only time in literally 30 years, one $200 million investment increase. That’s the only time we’ve seen an investment enhancement. This issue has to be addressed.”
Only 18 states have gas excise taxes lower than Michigan’s, according to the National Tax Foundation. However, when you add in other taxes and fees placed on fuel, Michigan moves to No. 6 in taxes on a gallon of gas.
* 18.4 cents. That’s the federal fuel tax levy. Michigan gets money back from this levy via federal transportation aid. Michigan, though, has long been what’s called a “donor” state, in that it sends more tax revenue for roads to the nation’s capital than it gets back in road aid. A January story on mlive.com put the ratio at 92 cents in road aid for every $1 Michigan sends back east.
* Zero. Michigan draws no dollars from its long-troubled general fund to pay for road construction or repairs. None of the Michigan Department of Transportation’s almost 2,900 employees are paid out of the general fund.
So why is the leap to $4 gas making a difficult situation even worse?
First, the primary fuel levy for the state is based on gallons purchased. What do people try to do when gas prices rise? Buy fewer gallons. What else do they do? Look for vehicles that are more fuel efficient. The state already is fighting these trends, which is why gas tax revenue has been going down.
But Nystrom says Michigan policy worsens the situation. In addition to its fuel levy, the state imposes a 6 percent sales tax on fuel buys. “At $4 per gallon, that’s paying almost a quarter in sales tax — money that doesn’t go to roads and bridges,” Nystrom explained. “A few pennies from the sales tax does go to (mass) transit, but not a penny goes to the road and bridge fund.”
Since the sales tax is levied as a percent of cost, it magnifies price spikes, which drives consumers to find ways to buy fewer gallons, which drives down gas tax collections.
“The sales tax component of gas has to be under review,” said Nystrom.
Michigan also relies heavily on vehicle registration fees to fund road repairs. In fact, for fiscal 2011, the state expects more from registration fees ($864.5 million) than from the gas tax ($826 million). Such fees are higher on new vehicles. While the Detroit 3 are reporting good news on their balance sheets, it’s all based on sales figures that are far below what they were early in the century.
And even when Michigan comes up with the money for maintenance, some of its policies hamper proper use of the funds, argues Thomas Maleck, a civil engineering professor at Michigan State University.
“Michigan’s trucks are unique in the nation. We allow 82-ton trucks when everyone else limits them to 40 tons,” he said, adding that the heavier trucks are putting loads on the roads that they cannot handle,
Another problem is the shallow depth of Michigan’s road beds. “In Europe, they go 5 feet deep,” Maleck said, “but we go only 2 to 2.5 feet.” A shallower bed shortens the life-span of the road, forcing Michigan to make repairs more often, he explained.
Maleck, who claims 50 years of experience in the field, has what might seem an odd solution for Michigan drivers: gravel.
“We have too many miles of paved road,” he says, which forces the state to do cheaper, shallower roadways that don’t last. “This makes matters worse in the long run.”
10 Comments
Does anyone else find it odd that we cannot get back what we have paid back in fuel taxes from our benevolent federal government, yet they are somehow able to find at least one-half billion dollars to fund a train line going into a city that lost a significant portion of its population in just the last ten years alone?
MDOT has complained for years of their lack of funds to maintain existing roads, bridges, etc. The conditions have worsened and can only continue to do so. Yet, “new projects” abound, no matter how ill-conceived and unsupportable. Check out the true story (not the sanitized PR version) of the Constantine US-131 Bypass. I understand why my elders claim transportation is a mainstay for stupidity, cronyism and organized crime.
Blame our congressional delegation for not getting all our money back from the federal government in regards to the gas tax. They have known about this for years and have been unable to do anything about it. Our entire Congressional delegation should be removed for their incompetency on this one issue. A good road system is critical to the economic future of this state and they do nothing about it.
I for one am tired of subsidizing other states. Its time to eliminate the federal gas tax. We need to keep our gas tax funds in Michigan. The interstate system is completed. The feds need to get out of this business.
I thought sales taxes were only levied at the wholesale level for gas. Think of how difficult it would be to collect at the pump where prices change hourly. This would mean that the amount collected is less than if it were collectesd at retail levels.
The interstate system is not complete and requires ongoing repair and resurfacing . Plus, it was funded as part of the National Civil Defense Act and was intended for national security to provide a system to move our armies and equipment and weapons systems. In every seven miles of Interstate Highway you will find one mile of straightaway for emergency landings of airplanes.
We will never get a dollar for dollar return of our tax monies as long as other states have army, air and naval bases that suck up big federal dollars.
Please consider forming a group to determine road user fees for Michigan roads. I have submitted proposals to state Legislators but the replies have been basically: 1) It is illegal; 2) it will hurt tourism; 3) it will take too long to gain money. I refer to some examples of states that are having favorable results, even though some examples are “toll” states. I am not suggesting we be a “toll” state (though I am not opposed to that as a consideration). Pennsylvania, a “toll” state, has a $3.90 entrance “fee.” North Carolina has a $2.00 entrance “fee.” W.Virginia, a “toll” state without toll booths on its 18 entrances/exits, is currently establishing a”fee” for a 30 mile stretch of I-35 (which happens to originate on the Michigan border and extend to W.VA). Last year, W.VA apparently netted over $85 million for its roads. The proposed I-35 section is anticipated to bring-in $2 million in the 1st year.
Yes, the Michigan Congressional delegation need to get a bigger share of our money back from the Feds, but they seem incapable of doing this. What we should be able to control is MDOT spending on less than optimal projects. There seems to be money for roundabouts, traffic islands and many other lower priority items. Our Governor and legislature ought to be able to accomplish this.
We could save a ton of money if we “de-privatized” most State road construction. Currently, we are paying private corporations to do the engineering and road repair. They have very little motivation to make the road durable (beyond minimum requirements). If it breaks down, they get paid again to pave it in a few years.
They also charge twice as much to do engineering work, and charge a “profit multiplier” on top of all of their work. These guys are profiting off of $Billions of your tax dollars. The MI Transit Authority is one of the most powerful lobbies in Lansing, and they have their hands in the pockets of both parties. So much so, that they got themselves exempted from the MI Business Tax.
I think that highway construction is done at, “prevailing wages”. Eliminate this and highway construction would be cheaper–10-20% would be my guess.
Has anyone done a study as to the 10-15 year cost differential [up-front costs v. the overall life expectancy expenses] between building our roads in Michigan as we do and – say – how they build them in Canada? In every sense, the traffic and weather conditions are almost identical in most major metro areas [or even more congested in a region such as Toronto].
How do we get our politicians to immediately begin the process of limiting the gross axle weight of big trucks? Seems as if our economic conditions – if that was the primary rationale for allowing such beasts on our roadways – those conditions are so different now.