Michigan's newest proposed road solution would give cities, counties control, and it has bipartisan support

LANSING, Mich. - A new package of bills introduced at the legislature is taking a different avenue to fixing Michigan’s deteriorating roads - and it has nothing to do with raising the state’s taxes.

Instead, more than a dozen proposals and bills introduced by the members of the state’s transportation committee would free up Michigan’s local governments to collect their own gas and registration taxes that would go directly to roads managed by those bodies.

This is a big deal for local governments in Michigan. As of right now, Michigan’s local municipalities have almost no options for raising money to fix their own roads - an outlier among states.

“(I’ve been here) 34 years, I’ve watched five governors try to address having a sustainable funding source and when Chairman (Jack) O’Malley approached me about giving locals more money, that sparked an interest with me,” said Rep. Tim Sneller (D-Grand Blanc), who serves on the Transportation Committee.

Currently, money raised from the state’s gas tax gets filtered through a complex formula that decides which roads receive the most money. Michigan’s major roads like I-75 and I-69, receive a large majority of that funding. But as Sneller notes, that leaves very little for local roads - the ones in worst shape.

“By the time it gets here, it’s pennies. It doesn’t really solve the long-term problem,” said Sneller.

That funding has resulted in a massive disparity among the condition of each road type. Almost half of Michigan’s local roads are graded in “poor” condition, compared to it’s highways which only 15 percent are considered as bad. Gov. Whitmer’s 45 cent gas tax hike would follow a similar pattern, with 70 percent of raised funds going to state roads and only 30 percent going to county and local roads.  

To remedy this trickle-down method of state funding, O’Malley (R-Lake Ann) wants to give local agencies the option to fund their roads. 

“(There are) 15 proposals and bills making there way through the system. All of them in one way or another are trying to extend money, whatever it is, to spend it smarter and wiser," said. O’Malley.

Put very simply, Michigan is one of the most restrictive states in the country in terms of how it funds road construction. Almost the entire responsibility of keeping the roads in good condition rests on the state - a responsibility that the Citizens Research Council (CRC) says has been too slow in fulfilling.

“...when you look at the other 49 states, depending on the one, they have local option gas taxes, local option registration fees, sales taxes, funding that can be used in roads in the county,” said Eric Lupher, president of the CRC. “Michigan doesn’t have any of those things.”

When then-candidate Whitmer spent her gubernatorial race promising to “fix the damn roads,” Lupher and the CRC understood fixing Michigan’s infrastructure would be a major issue during the next legislative session. That momentum grew even more following estimates from MDOT and the County Roads Commission it would take an extra $3.5 billion a year to bring state and county roads up to par. And that doesn’t include what it would take to repair village and city roads - as no study exists on that figure exists.

Most agree it’s going to take more funding to pay for Michigan’s deteriorating roads, but that’s where the consensus fractures. 

Should it be by putting up assets like the state’s Blue Water Bridge, as was suggested by state Republicans in June?

Or maybe a 45 cent gas tax increase, proposed by Whitmer?

The first option doesn’t guarantee an annual revenue stream and the second could price low-earners out of filling up their cars and trucks. So what’s left?

O’Malley’s bipartisan package of bills focuses less on raising more money at the state, and instead allowing local governments the option to do the raising. The way they see it, local governments know best the issues they face, so shouldn’t they decide how to deal with them? That decision was informed by a CRC-commissioned study (https://crcmich.org/wp-content/uploads/memo1158-Local_Road_Funding_Options.pdf) that dived into just how Michigan earned its reputation for some of the worst roads in the country. 

At the heart of Michigan’s problematic road system is a tension between who is charged with fixing the roads in the state. For decades, lawmakers in Lansing operated with the conclusion that they were best-informed to deal with the roadways.

The way lawmakers back then saw it, if every county and city had the option to raise taxes, areas with more people would raise more money, creating an unequal tax structure. 

“The state is best suited to levy taxes and send them back. Relieve local governments of doing it,” Lupher said, describing the mindset back then. “That’s great if the state lived up to its promises.”

Instead, for the last 15-20 years, lawmakers have gone to Lansing and only focused on the state’s overall tax structure. Lupher said that focus came with an emphasis on cutting state taxes, which came at the expense of local governments. It may have kept the state government budget balanced, but local governments were forced to cut their own taxes to keep their budgets balanced. 

Local municipalities do have one way to raise money to fix their roads, and that is through a millage - otherwise known as a property tax. Used fairly often, of Michigan’s 83 counties, only five of them don’t have a city, village or township with its own millage dedicated to fixing its own roads. However, this system puts a heavy tax burden on the state’s residents, resulting in unequal impacts on local governments with less property value and lower-income residents. 

That’s not to say millages approved by constituents don’t belong in the conversation, but the CRC’s study recommends exercising other local options.

“That planted the seed in Rep. O’Malley’s mind. Here’s an opportunity to do something. If local communities want to raise taxes, it’s not the legislature raising taxes, but local governments,” Lupher said. “Local road agencies know their needs more than the state ever could.”

Local governments aren’t just limited by how they raise money, but how they spend it as well. One obstacle that counties face is a cap on the amount of money they can spend on road repairs. For any construction project that exceeds $100,000, a county must bid it out to a private contractor. That’s despite having the manpower and expertise available to perform that work.

The County Road Commission argues they lose efficiency and employees to the private sector because work must be bid out.

“Often, there’s a lot of work we could do on a corridor, but because of that threshold, we can only do a half a mile or various things we could do at a township,” said Deputy Director Ed Noyola. “We lose all this efficiency.”

The County Road Commission said it bids out 98 percent of its regular projects. Few counties have the capabilities to take on most of its projects. Just like with local road taxes, this regulation is baked in history. Noyola said there was concern in the 80’s during an economic downturn that government projects would take work away from the private industry. 

“I understand when times were tough - now that times have gotten better, we feel we have been hamstrung here,” he said. “We would like to see some adjustment.”

Within the transportation committee’s package is a bill that would raise the cost threshold to bid out a project to $500,000. 

Whitmer’s team said they plan to review the legislation, but in general, are glad the legislature continues to work on solutions.

“It’s going to require a comprehensive solution to address this major challenge facing our state and she’ll partner with anyone who wants to work on finding a real solution,” wrote Tiffany Brown, the governor’s press secretary in an email.

This transition toward more local control has the backing of the Michigan Municipal League, which argues diversity of options at the local level would “enhance revenue.”

“How it gets implemented, how much does it raise, those are valid questions, but many of those questions are answered at the local level,” said John LaMacchia, who oversees transportation, infrastructure, and energy at the MML. “The state still has a responsibility, but this would not act as a way to supplant their funding, but rather enhance it.”

Not every bill has to do with loosening up restrictions for local governments, however. The committee’s legislation also includes a three-bill package that would create an innovation board that could explore alternative materials and practices for fixing the roads. 

“As chair, I refer to these as my little ducklings, and we’re trying to get them across the road,” O’Malley said. “We need to stop thinking about this as a Lansing issue. It isn’t a Lansing issue - it’s more of a local issue.”

Jack Nissen is a reporter at Fox 2 Detroit. You can contact him at (248) 552-5269 or at Jack.Nissen@Foxtv.com