In 2015, when Governor Rick Snyder approved a road maintenance payment plan with increases in gas tax and vehicle registration fees, the consensus was that the billion dollars a year that ‘it would generate wouldn’t be enough to do much. more than stave off continued decline.
As Chad Livengood explains in this week’s Crain Forum section, that prediction turned out to be correct.
It’s a predictable result of state highway funding policies not spending enough predictable money — and nothing that’s happened since, including Governor Gretchen’s $3.5 billion bailout plan. Whitmer, did much to address this structural problem.
Whitmer says his bail plan is starting to work after lawmakers rejected his proposed 45-cent-per-gallon gas tax hike that would have generated $2.5 billion more a year for road repairs and bridges.
Borrowing for major repairs was now a nice down payment on what the state really needed, but it’s still a very big and expensive one-time band-aid.
To get 80% of roads in good or good condition (currently it’s 60%), MDOT pegs Michigan’s annual road funding gap at $2 billion a year for the remainder of this decade.
Infrastructure such as passable roads are essential to the economy of the state. This is the first time that a senior executive has discovered corporate sites with the state.
Last month’s freeze-thaw cycle was particularly brutal on the roads, as is evident to anyone who has driven their car into one of the city’s many sinkholes.
The logical option as the auto industry moves at an ever-increasing speed towards electric vehicles is to find something other than gasoline to tax.
There is a simple solution that anyone can understand: a dedicated 1% sales tax would bring in about $2 billion a year, which is about what is needed without too much risk associated with the transition to electric vehicles.
Failing that, the Michigan Constitution could be amended to allow local areas, cities, and municipalities to claim local sales taxes dedicated to their roads. This would provide cities that want to improve their roads with a way to control their own destiny, rather than depending on money allocated by the state and federal government.
This would be useful for places with denser populations, where the roads simply take more wear. Michigan’s 6% statewide sales tax is high nationally, but the state has the distinction of not allowing localities to levy it.
Michigan’s statewide sales tax ranks 17th in the nation, according to the Tax Foundation, but once you add in the average local sales tax, only 11 states have a lower total sales tax. .
Most major cities collect more than 6%. The total New York City sales tax is nearly 9%; Chicago’s is over 10%. This reflects the increased costs, as well as the increased benefits to residents, of living in an urban area. Michigan needs similar flexibility.
A local sales tax poses problems, especially for cities with a lot of through traffic. But it would give an option to cities that want a steady stream of road funding — and provide a way to bring control of pavement conditions closer to those who use the roads.