Road deal not great but good enough
The road bill passed by the Legislature this week is the least possible deal they could have crafted, but at least, after four years of struggle, they finally found a majority.
Make no mistake, it is worth celebrating that this package should eventually raise up to $1.2 billion to fix Michigan’s worst-in-the-nation roads and bridges. There has to be a sense of relief that the stand-off was at last broken, and that hundreds of millions of dollars in new money will be available for future road work.
And yet, the bill needlessly places the general fund at risk by eventually committing $600 million that may be needed for other urgent priorities. The better solution has always been funding roads in the traditional manner – through fuel taxes and vehicle registration fees that, by law, have to be used for transportation projects.
Instead, this bill calls for just a 7.3 cent increase in the gasoline tax and 11.3 cent hike in the diesel tax, which together will raise $400 million in new revenue, and a 20 percent jump in vehicle registration fees that will add another $200 million.
The other major flaw in this bill is that the money rolls in too slowly. Michigan’s roads are in urgent need of fixing today. But for the next two years, road revenue will be fairly stagnant. After that the new funds will start trickling in, starting with an estimated $450 million in the 2017 fiscal year and reaching the full amount in 2021. Given that the 2016 fiscal year budget already contains $400 million in general fund money for roads, the actual year-over-year increase in 2017 is just $50 million.
Lawmakers took a page from the Affordable Care Act playbook and delayed the pain of the law they passed until they are safely beyond the 2016 elections. That’s the sort of cowardice that has marked these deliberations from the beginning. The Legislature had a chance in the lame-duck session last year to pass a sensible roads bill that raised highway funds quickly and efficiently through a straight increase in fuel taxes and registration fees. Instead they passed the buck to voters in the form of the disastrous Proposal 1 ballot issue, which was decidedly defeated last May. The overwhelming rejection of Proposal 1 in many ways limited what this new Legislature could do. The consensus was that any deal would have to combine tax hikes with general fund money shifted from other spending programs. This final version, which Snyder has said he will sign, relies on $600 million from the general fund. That’s more than the governor wanted, and more than is prudent, given the uncertainty about future Medicaid costs, the Detroit schools bailout and other infrastructure needs.
Again, lawmakers took the coward’s path. Instead of identifying specific cuts, they punted those decisions to a future Legislature and governor. While Snyder contends the obligation can be covered by tax revenue growth, that’s far from certain. A downturn in the state or national economy would blast that projection to bits.
Democrats, aside from Detroit Sen. Virgil Smith, are attacking the deal for its potential impact on other spending. Their criticisms have merit, and are at the same time disingenuous. Democrats, even after their leaders agreed in principle to a road deal in September, took themselves out of the process when they weren’t allowed to lard up the package with non-transportation spending. They also wanted to fund road work by reversing some of the key reforms that have improved Michigan’s business climate.
Their charge that business is not paying its fair share with this bill is ridiculous; the diesel tax is mostly paid by commercial interests.
The minority party decided there was more political advantage in letting Republicans own the deal. Democratic votes might have produced a much better solution.
But there is a road funding package in place, and it will amount to the largest investment in transportation infrastructure in 50 years. It also raises the fuel tax after 2021 with inflation, which should eliminate future funding battles. It also heads off the ballot drive sponsored by labor unions to raise money for roads by increasing the corporate income tax, which would kill the state’s recovery.
So it’s not a great bill. But in the context of what was possible, it’s good enough.
– The Detroit News