AP graphic of highway construction
LANSING, Mich. (Detroit Free Press) - A Republican state senator says Michigan can raise an extra $1.2 billion a year to fix the state's roads and bridges without hiking fuel taxes, sales taxes or vehicle registration fees.
Sen. Patrick Colbeck, R-Canton, said he is working on bills to raise the needed money through increased state revenue generated as a result of economic growth; reducing interest payments on debt; building better roads that will last longer; and generating revenue from state-owned assets through deals involving advertising, concessions and naming rights.
Republican Gov. Rick Snyder says fixing and maintaining the state's roads and bridges is essential to the state's economy and the longer the work is put off, the larger the bill will be. Snyder's Feb. 7 budget for the 2013-14 fiscal year proposed a hike of about 14 cents per gallon in the price of unleaded gasoline and a hike of about 18 cents a gallon in the cost of diesel fuel. The budget also proposed hiking vehicle registration fees about 60% for cars and light trucks and about 25% for heavy trucks.
The impact on families would be about an extra $120 per vehicle per year, Snyder said.
Several bills have been introduced in the Legislature to raise extra road money. Some would instead involve the use of sales tax money and would require a public vote.
But Colbeck said in a news release today Michigan families are "taxed enough," and "before we even look to ask them for another dime, we need to exhaust every other potential source of funding."
Lance Binoniemi, vice president of government affairs for the Michigan Infrastructure and Transportation Association, representing road builders, said his group and a broader coalition pushing for increased road funding - the Michigan Transportation Team - welcome all suggestions and he appreciates the fact Colbeck has crunched some numbers.
Binoniemi said he wants to study Colbeck's numbers further but he would have concerns about the reliability of some of the revenues the senator cited. For example, Colbeck pegs a significant amount of increased revenue as coming from economic growth, but given the historic cyclical nature of the state's economy, sometimes that growth is not there, he said.
The Free Press also sent an e-mail to the Michigan Department of Transportation seeking reaction to Colbeck's proposal. An official said the department was working on a response.
Colbeck's plan focuses on five main areas:
• Putting increased tax revenues generated by economic growth toward fixing roads and bridges.
Michigan has the 6th-fastest growing economy in the nation which recently spurred a 5.4% increase in general fund revenue, equal to about $500 million. If the state freezes spending and puts that "economic growth dividend" toward roads, it reaches close to half the targeted amount, Colbeck said.
• Paying off state debt to save on interest payments. Colbeck said the state pays $833 million in loan payments each year, of which $238 million goes to transportation bonds.
"If we were to prioritize paying off our 'credit cards,' we could start earning interest rather than paying interest, plus put the $238 million directly into additional road projects," Colbeck said.
He didn't say where the money to pay off the debt more quickly would come from, but said in an earlier op-ed article some of the money could come from the state' Rainy Day Fund, which now contains just more than $500 million and is slated to grow by another $75 million in 2014.
• Moving to longer-lasting concrete roads which he said would last about 40 years, compared with about 20 years for asphalt roads.
"While the initial costs will be more expensive, the ongoing maintenance costs would be much lower, resulting in potential savings of over $1 billion per year," he said.
• Leveraging state assets such as bridges, offices, rest areas, vehicles and websites to raise revenues through deals involving advertising, concessions, naming rights or other arrangements. Colbeck said such deals could raise $64 million to $462 million a year.
• Using "design, build and maintenance" contracts with road builders, which Colbeck estimated could save about $450 million a year.
By Paul Egan, Detroit Free Press Lansing bureau