Oakland Business Review: Budgetary potholes rattle economy
Wednesday, February 27, 2008
link: Budgetary potholes rattle economy
By Michael Nystrom
Michigan's roads are a growing problem. Every Michigan driver has had at least one encounter with a rim-bending pothole, and as we enter the heart of pothole season, it's only going to get worse.
Policymakers have the power to end the neglect of our roads and transportation infrastructure. Yet they continue to overlook the important role safe roads and infrastructure have in our economic recovery.
Unfortunately, there is little money to make the necessary road upgrades. In fact, Michigan's 2008 budget included an 18 percent cut in the Michigan Department of Transportation's road and bridge program, due to falling gas tax revenues and vehicle registration fees. It is estimated that we need an additional $700 million a year to meet the needs of the state system and an additional $2 billion at the local level.
Michigan's chronic lack of road funding has forced the state to borrow money. More than 20 percent of our road dollars are spent on debt service. We must have more revenue dedicated to transportation funding.
Unless officials take a serious look at how Michigan funds our transportation system, shortfalls will continue to stall the economic turnaround.
Cuts to transportation funding hurt Michigan workers, and not just road builders. A recent study by the University of Michigan concluded that by 2009 our state will have lost 12,255 jobs due to spending cuts in MDOT's five-year plan. These job loss figures could double after including the effect of dwindling local transportation dollars.
When Michigan-based companies relocate to another state or cut hundreds of jobs, it generates major headlines. However, when more than 12,000 jobs are lost because of Michigan's lack of transportation funding, no one seems to care. Our state cannot afford job losses of this magnitude.
Filling the "potholes" in our current transportation budget would create thousands of jobs and billions of dollars in economic activity. Every $100 million spent on road and infrastructure projects creates or maintains 4,750 good-paying jobs. Every $1 spent on improvements creates $6 in spin-off activity. This kind of economic activity is crucial as Michigan struggles to redefine itself in the new high-tech economy.
We must look for a comprehensive way to fund the upkeep of our state's aging roads and bridges. The Michigan Transportation Team - a broad coalition of business, labor and government agencies - supports a long-term plan for dedicated and sustainable funding. The plan would increase the state's gasoline tax 3 cents a year for three years and slightly increase vehicle registration fees. A 9-cent gas tax phased in over three years represents little more than an inflationary increase since the gas tax has not been raised in 10 years.
Our state legislators must increase state transportation investment by at least $1 billion per year. And Michigan can't continue to rely on the federal government because we do not have the state resources to match federal dollars beyond 2009.
Regardless of strategy, it is crucial we raise additional revenue for our transportation system. Putting off a solution to chronic underfunding is not an option.
Michael Nystrom is co-chair of the Michigan Transportation Team. Contact him at email@example.com.