The Long and Winding Road

Transportation funding is a passion of ours, in that we agree with many Americans who feel we haven’t spent nearly enough on our infrastructure over the past 50 years. Acting Federal Highway Administrator Gregory Nadeau called for a long-term highway funding plan last fall, though no real movement has occurred at the federal level. Here in Michigan, we went to the polls in the spring to vote on Proposal 1, which among other things would have raised additional funds for transportation. We all know what happened.

By now everyone has joined the collective autopsy of figuring out why Proposal 1 failed. Everything from the general anti-tax sentiment of the masses to the proposal being too complicated and too tied has been discussed and some see it as a message being sent to our elected officials. Furthermore, while we were told during the run up to the May 5th election that “there is no Plan B”, we are now seeing Plans B, C, D, and E. Based on the progress made by our elected officials since then, we would guess the general electorate would give them all an “F” grade.

You see, despite what many have tried to tell us, Michiganders understand the need to fund our infrastructure. A poll conducted by EPIC-MRA on May 5 reveals that 87 percent of respondents want our legislature to immediately come up with a solution to the funding issue. More than 85 percent further stated that they disapprove of doing so by cutting K-12 education or medical care for the poor or elderly. Even more striking, nearly two-thirds are willing to accept higher taxes if those funds were mandated to go to repairing our roads.

This appears to echo the general sentiment around the country, as nearly half of the states in our fine union have enacted new transportation legislation in the last few years to dramatically increase spending. They too seem tired of waiting for Washington to “figure it out” and have taken matters into their own hands.

It is clear that additional revenue must be generated in order to meet these needs and that Michiganders, and Americans in general, are willing to raise taxes to do so. (Unless those flying cars we were promised as kids are actually on their way.) The caveat, at least from our perspective, is that voters want to know that the new funding will actually fix streets in their neighborhoods. No autopsy of Proposal 1 we’ve seen seems to understand that people were, at heart, vastly disappointed to see how little additional funding headed toward their community and their neighborhood streets.

In the weeks leading up to the vote on May 5, the Michigan Department of Transportation created a web page where voters could see how much their community would benefit from the passage of Proposal 1. The site calculated the new funding levels based on the formulas described by Act 51 of 1951, which governs how the gas tax is distributed. People saw that their community, while receiving a 50 percent or even 75 percent increase in revenue, would likely be able to add only one more local street to their current paving program. One additional street is hardly transformative and is the essence of the problem in our opinion.

Act 51 describes that, after a few adjustments are made for certain dedicated uses, the money collected by the State for transportation is divided as follows: 39 percent to the Michigan Department of Transportation (MDOT), 39 percent split among the counties, and 22 percent divided among all municipalities. In the case of the roughly $1 billion in additional funds that would have been raised by Proposal 1, this formula means that MDOT would have received nearly $400 million while each of Michigan’s 83 counties would split another $400 million. Each of the 533 municipalities eligible for funding would split the remaining $200 million.

Before you do the math in your head, this means that each county would’ve received an additional $5 million dollars per year on average (some more, some less), equating to the reconstruction of one additional mile of county road per year. Worse yet, the average municipality would’ve received an additional $375,000 per year, enough to resurface an additional half-mile of local streets.

To us, the disconnect between the laudable idea of increased investment in our infrastructure and the practical reality of how it will impact us at home was the final nail in Proposal 1’s coffin. It adds to the mistrust that exists between the electorate and those who are elected as we the people were asked to self-impose an additional $1 billion in taxes for the reconstruction of one additional street per year in our community.

The entire thing has us thinking a lot about Act 51 and the role of each level of government. We’re wondering why some agencies are in the road business in the first place and, better yet, why agencies have jurisdiction over certain roads at all.

We were thrilled to see that we are not alone. In a recent article by Adie Tomer, a senior research associate and associate fellow in the Brookings Institution’s Metropolitan Policy Program, posed a light bulb worthy question. Tomer asked if the federal gas tax was created with the main purpose of funding the construction of the Interstate Highway System, which is now complete, then what is the on-going purpose in continuing the tax?

More to the point, what priorities should the federal government undertake with regard to transportation? General maintenance of the system? Relieving highway congestion? Pushing high-speed rail? Indeed, should the federal government continue to collect tax dollars for the purpose of returning them to states for local road projects at all?

Maybe the solution at the federal level is simply to reduce the federal gas tax and provide money directly to state DOTs for the sole purpose of maintaining the interstate freeway system and associated bridges. This would leave funding and administration of local surface streets to each state and their regional planning groups, counties and municipalities.

Tomer’s question was a light-bulb moment for some of us and got us asking a lot of questions specifically focused on Michigan. However if the federal government got out of the local road business, then most of our current policies here in Michigan would need careful consideration. For instance, should MDOT have jurisdiction over roads like Woodward or Grand River or should they focus solely on freeways? Why do counties have jurisdiction over some roads at all when a city government is available to better reflect the wishes of its residents? Does Act 51 need to be modified or thrown out completely?

We don’t have all of the answers, but to us these sort of questions are far more important and fundamental than whether we increase license plate fees or tax gasoline at the wholesale level. They strike at the heart of why we should invest in infrastructure at all, who benefits and who should have a say in how a community develops. Unfortunately, no one else seems to be talking about these issues despite our assertion that answering these questions properly would result in an overwhelming approval for new funding.

This point was driven home to us when voters in the City of Ferndale crushed Proposal 1 on May 5 like the rest of the state, but also approved a local bond issue for road improvements. (It is worth noting that several other communities did the same.) Ferndale, a client of Giffels Webster, has always clearly outlined their vision for their community, connecting it to the condition and configuration of their streets and infrastructure. In short, the city gets it. Ferndale understands that maintaining a sound system of infrastructure will save them money in the long term. They understand that it will also help drive economic development and improve quality of life, which is why you see vibrant commercial areas with streetscapes and bike lanes throughout the city for the benefit of residents and visitors alike. Ferndale is an example for other local communities in this regard.

To close, we have learned that reasoning behind action is just as important (if not more) than what is done. We urge everyone to ponder this in our last full week of summer and come back to the table this fall ready to discuss a vision for Michigan’s infrastructure in the 21st century. (Unless the flying cars are truly a possibility… that would be pretty cool.)