By DAVID EGGERT
LANSING (AP) – As Michigan readies for a vote on raising state taxes to smooth a deteriorating network of roads and bridges, one reason is because it’s contending with the reality that a significant source of money for the projects – federal aid – is down.
The Federal Highway Trust Fund, which accounts for nearly one-third of the state’s transportation budget, made about $1 billion available to Michigan in 2013. That’s 8 percent less than five years earlier and 15 percent less when adjusted for inflation, according to figures compiled by The Associated Press.
The funding that generally comes from federal gasoline and diesel taxes was up 20 percent over a decade but down 5 percent in inflation-adjusted dollars.
The AP analysis also shows that Michigan ranked seventh-lowest among states in per-capita federal transportation funding in 2013 and second-lowest in per-capita overall spending on highways, roads and bridges. Only Georgia spent less per capita.
The same problem that has left the Highway Trust Fund teetering with insolvency is vexing Michigan – people drive less and with more fuel-efficient vehicles while paying per-gallon gas taxes unchanged for two decades. For the last four years, Gov. Rick Snyder and lawmakers have had to divert money from the general fund to ensure the state receives its matching federal transportation money because traditional revenue sources – state fuel taxes and vehicle registration taxes – are lower or stagnant.
“It’s not just inflationary factors eating away at” revenue, said state Transportation Department spokesman James Lake. “There’s an actual loss of dollars.”
In arguing for increasing Michigan’s 6 percent sales tax to 7 percent on the May 5 statewide ballot as part of a road funding plan, the Republican governor said if nothing is done the percentage of state highways in good or fair condition is expected to fall from 82 percent last year to 44 percent in 2020.
No one is disputing the need to spend more to keep the transportation network up to par. Debate over Proposal 1 – the compromise struck between Snyder and legislators in December – has centered on whether it’s the right answer.
“This is a huge public safety issue. This is a much better, cleaner way than we’ve done things in the past,” Snyder said of the constitutional amendment.
Michigan has some of the country’s highest taxes at the pump but spends less on transportation than other states because the sales tax applied to fuel mostly goes to education and local governments under the state constitution.
The amendment would increase the sales tax and remove it on fuel purchases, ensuring all taxes paid at the pump go to roads or other transportation infrastructure.
The sales tax hike would ensure municipalities and schools don’t lose funding and actually get $400 million more.
If voters approve the measure, 10 other laws will take effect – including restructuring and more than doubling the state’s 19-cents-a-gallon gas tax to generate $1.3 billion more a year for roads, bridges and public transit. Drivers initially would pay nothing more at the pump because they would no longer owe sales taxes. But over time, the gas tax would rise with prices.
Vehicle registration taxes would no longer depreciate, heavy trucks and electric vehicle owners would pay more and low-wage earners would see a tax credit fully restored.
The proposal’s complexity is giving critics ammunition.
“Our elected leaders can do better to solve the roads problem than tacking on $700 million in special interest deals so that we can begin fixing our roads,” said Paul Mitchell, a former Saginaw-area businessman and congressional candidate who formed a ballot committee to oppose the measure.
Anticipating no federal funding solution from Congress, the coalition urging a “yes” vote on Proposal 1 said it’s the “last, best chance” to guarantee adequate state funding of roads and bridges.
Chris Hundt, an MDOT transportation planner, said recently reintroduced legislation to increase the 18-cents-a-gallon federal gas tax by 15 cents would keep afloat the Highway Trust Fund without needing to take money from other federal accounts. But the federal fuel tax increase, which appears unlikely, could ensure no more than inflationary increases in U.S. funding – “which nobody thinks is adequate,” he said.
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