Snyder: State should spend $1B more a year, link spending to road use
Thursday, October 27, 2011
< http://www.crainsdetroit.com/article/20111026/FREE/111029933# >
Gov. Rick Snyder is calling for major changes in the way Michigan raises and distributes money for its roads and bridges, including linking spending to road use and traffic and eliminating Michigan's gas tax in favor of a percentage levy at the wholesale level.
The governor today called for Michigan to find additional revenue sources to generate $1 billion-$1.4 billion for roads and bridges but stopped short of laying out a detailed plan to raise all the money.
Snyder also wants a new regional transit authority for Southeast Michigan that will coordinate existing bus services and permanent, dedicated regional funding to invest in rapid transit along routes including Gratiot, Woodward and Michigan avenues and the M-59 corridor.
The recommendations were part of an infrastructure message to the Legislature Snyder released this afternoon and highlighted at a news conference at Lawrence Technological University in Southfield.
"The point about infrastructure is ... it's something we take for granted," Snyder said. "And we take it for granted because we rely on it, which makes it critical to our lives."
Snyder said Michigan has underinvested in its infrastructure, including transportation, sewer and water, and broadband.
In the area of funding for roads and bridges, Snyder proposed to eliminate both Michigan's 19-cent per-gallon gas tax and 15-cent diesel tax, replacing them with a percentage tax on the wholesale price.
The proposal would be revenue-neutral and would be "a more viable long-term funding approach to maintaining roads and bridges," Snyder said in the written text of his message.
He said the state's goal should be to increase infrastructure investment by $1 billion to $1.4 billion each year. But at his news conference, Snyder said he is not suggesting a specific proposal to the Legislature at this point or a vote on the part of Michigan citizens. He said he "would like to take a few months to have a public dialogue" to look at the best ways to raise needed revenue.
One option he mentioned would be an increase in the state vehicle registration fee. For example, a state registration fee increase of $10 per month on the average passenger vehicle would raise nearly $1 billion, Snyder said.
The governor also called for legislation that would allow counties and regional authorities to levy a local registration fee dedicated to transportation.
Lawmakers would need to approve legislation allowing the fee, which would also need approval by local voters. Snyder said such a local fee should not exceed $40 per vehicle per year and at that level could raise nearly $300 million, which would be collected by the state and returned to the local agency.
Various local funding options have been suggested for years, including local-option gas and diesel taxes, registration fees, license fees, property transfer fees and sales tax.
Mike Nystrom, executive vice president of the Michigan Infrastructure & Transportation Association, said Michigan "is one of the only states where state revenues fund the majority of the local system. We need to give locals more options to more adequately fund their own systems."
Nystrom said overall, MITA welcomes Snyder's call for action to provide long-term funding solutions for Michigan roads and bridges. He said "with bold leadership from the governor…it gives us an opportunity to finally come up with some solutions. We are hopeful that the Legislature will follow the governor's lead on this issue."
To get the biggest impact for new revenue raised, Snyder proposed a new distribution formula in which the highways and bridges that serve the most traffic would see the greatest new investment. He proposes to gradually subject all distributions of state transportation revenue to the new formula over the next seven years.
And at the local level, he is calling for all counties to have the ability to absorb their road commissions into county general government – legislation already pending in the state House.
Earlier Wednesday, House Speaker Jase Bolger, R-Marshall, and Minority Leader Richard Hammel, D-Mt. Morris Township, announced their support for two bills, House Bills 5125 and 5126, that would allow counties to eliminate road commissions and take on their powers, duties and functions.
Snyder said in his written message that "it is time to streamline the way we do business." He said businesses in Michigan have become leaner and more efficient and "it is time for transportation agencies to do the same.
"Michigan has 617 independent road agencies and 79 independent transit agencies. We are the only state in the country that has county road commissions – 81 of them in total – and 35 of those are not accountable to the rest of county government," Snyder said. "We need to modernize the way we administer transportation programs and do business in a streamlined and transparent way."
He said Michigan's transportation revenue distribution law, Public Act 51 of 1951, "includes archaic formulas that sprinkle state transportation revenue across all 617 road agencies, many of them responsible for only a few miles of road. The formulas are so outdated that two cities actually receive funds despite having no public roads or bridges in their jurisdiction."
One change he proposes is for the Legislature to remove cities and villages that receive less than $50,000 in transportation funding from the distribution formula. Instead of money going to the jurisdiction, the money would go to whatever larger road agency maintains those local roads and bridges.
He wants all agencies to meet performance criteria as a condition for receiving state transportation revenue, and wants those covered by the distribution formula to conform to Michigan's new law requiring employees to contribute 20 percent of their health care premiums, and to place new employees on defined contribution pension plans.
Snyder called on transportation agencies to meet a minimum number of best practices including development of an asset management plan for federally-funded highways and bridges, a safety plan, competitive bidding on contracts, fulfillment of consolidation plans and an Internet dashboard on operating and financial statistics for greater accountability.
Snyder also wants greater and more open competition for road maintenance and construction contracts across the state. He wants the Michigan Department of Transportation to select a portion of the state network and competitively bid for long-term engineering management services, construction and maintenance operations. He said he is giving MDOT 12 months to have the contracts in place and report back to him on the progress.
In terms of the regional transit authority for southeast Michigan, Snyder said that if three or more counties work together to form an authority, they should be allowed to dedicate a portion of the regional vehicle registration fee he proposed, to support public transit.
A task force includes the city of Detroit and Wayne, Oakland, Macomb and Washtenaw counties.
Other initiatives in Snyder's message included working with Michigan's congressional delegation to allocate federal funds to dredge Michigan ports, and also calling on members of Congress to recognize the importance of a new lock at the Soo Locks — and to provide funding needed to build the new lock.
Snyder in his legislative message again urged passage of stalled state legislation that would move forward the New International Trade Crossing bridge between Detroit and Canada.
And in the area of water and sewer infrastructure, Snyder called for changes in the spending of bond dollars including creation of a new grant program, a new state low-interest loan program, and streamlining the federally funded, state-operated loan program.
Broadband service also got attention in Snyder's message, including a call for the Michigan Public Safety Communications System towers to be open to Internet service providers, and a plan to streamline approvals of utility work permit clearances in state road rights-of-way.