MICHIGAN HIGHWAY FINANCE AND GOVERNANCE: |
When the Citizens Research Council of Michigan report, Michigan Highway Finance and Governance, was published in May 1997, it acknowledged the need for additional highway funding. But it also made the point that without structural reforms in the way in which the money collected for our roads is distributed and spent, inefficiencies will result in these dollars purchasing a lower level of transportation services than they should. The report suggested attention be directed toward:
To date, each of these suggested reforms have received at least some attention. The most meaningful attention came in the form of the "Build Michigan II" proposal introduced in May of 1997. While some of the issues discussed are in some form of implementation, as will be reviewed in this paper, other issues are receiving less attention. For example, because the distribution formula is scheduled to sunset later this year, it has not yet received a great deal of attention, but it certainly will. Unfortunately, while jurisdictional control, priority determination, and administrative efficiencies have received some attention, each issue is bogged down in the politics of state/local relations that seem to constantly be deteriorating from bad to worse. Tax RevenuesThe Build Michigan II proposal included a four cents per gallon increase in the State gasoline tax and other revenues from commercial trucking, which was enacted in July of 1997. Additionally, this proposal relied heavily on increased federal funding. This is likely to occur at levels greater than anticipated sometime soon. The U.S. House and Senate have both passed separate versions of ISTEA renewal legislation. The product of a conference committee will have to receive presidential approval to be enacted. While Report #321 dealt with revenues, it made no specific recommendations as to the proper level of tax increase. Reform IssuesJurisdictional ControlImproved jurisdictional control involves a rationalization of responsibilities for road and bridge construction and maintenance. This will occur by shifting control of roads and bridges among the different levels of government to reflect current travel patterns, road usage, and the incorporation of new municipalities since most roads were constructed and assigned to a level of government.
At present, the State proposal to shift commercial roads to their control seems to be in a holding pattern. Local governments, for the most part, are unwilling to buy into this proposal. This unwillingness may have as much to do with politics, and the poor relationship between the Michigan Department of Transportation and the county road commissions and municipalities as it has to do with the concerns expressed in reaction to the State proposal. Needs AssessmentThe second recommendation was that a uniform measure of road conditions should be utilized to perform a statewide evaluation of road conditions among all levels and units of government. The results should play a meaningful role in setting revenue levels and in distributing highway-user tax revenues in a manner that reflects needs. ... In conjunction with local units, establish a Statewide process that identifies needs and prioritizes the use and allocation of road funds for primary roads and major streets that cross jurisdictional boundaries.Build Michigan II did not directly address the issue of a needs assessment. However, by consolidating more major roads under State control, the State would be able to address many of the problems that have complicated the needs assessment process to this point. With a greater percentage of major roads under the jurisdiction of one unit of government, assessing the road conditions of different levels of government would become less of an issue. Pending any action to transfer jurisdictional control as proposed by Build Michigan II, the need for a uniform needs assessment methodology and a statewide assessment of the results to distribute tax revenues in a meaningful way remains a major concern. Physical StandardsThe new revenues raised from state and federal sources will be used to maintain roads and bridges in the middle of their lifecycles, to reconstruct roads and bridges at the end of their lifecycles, and to construct some new roads. The standards used in these processes should be examined. The standards currently used were formulated at a different time in highway use. A cost-benefit analysis should analyze whether roads and bridges should be constructed to last longer, with less need for reconstructing as often as is required with the current standards. While other states and countries are incorporating new technologies and methodologies to build better roads and bridges, MDOT and the local units of government are slow to incorporate what has been developed elsewhere. Administrative EfficienciesIntergovernmental cooperation and privatization present opportunities for savings in highway maintenance. Some intergovernmental cooperation and privatization currently take place. However, because highways run throughout the state, they lend themselves to greater use of these tools. The Allocation FormulaFinally, measures of highway use or road conditions should be incorporated into the Michigan Transportation Fund allocation formula so that state revenues are not maldistributed. Under the current formula, it would be necessary to increase taxes to higher levels than is optimal, with allocations resulting in unnecessarily high expenditures in some counties, so that adequate funds can be distributed to counties with multi-lane roads carrying higher traffic volumes. The Act 51 distribution formula did not include significant factors that have a bearing on the useful life of a road or a road's need for repair. As a result, road funds may not be directed toward roads with the greatest need for maintenance.The Audit Report went on to recommend that MDOT, in conjunction with the local units, identify factors that have a bearing on the useful life of a road or a road's need for repair for legislative consideration in any future changes in the Act 51 distribution formula.Build Michigan II would allocate revenues to counties based 50 percent on road miles and 50 percent on vehicle miles traveled. Cities and villages would continue to receive revenues based on road mileage. Local units of government would be responsible for fewer miles of road under the Build Michigan II proposal and the roads for which they would be responsible do not carry high levels of traffic. Comparison of CRC Findings
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Topic | CRC Findings | Build Michigan II | Current Status |
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Tax Revenues | A strong case can be made for additional revenues. The Gas Tax is the most likely source of additional state revenues. Property Taxes or a Local Option Gas Tax could be used for local revenues. | A 4-cent per gallon Gas Tax Increase was proposed, and more Federal Funds are relied upon. | Gas Tax increase was enacted in July 1997. Increased federal funds should result from ISTEA reauthorization, which should go to President Clinton soon. |
Jurisdictional Control | Jurisdictional Control needs to be addressed. Need to study and rationalize responsibilities. | Would shift commercial roads to State control. | Discussions are currently on-going. |
Priority Determination | Conduct a Needs Assessment and make it play a meaningful role in determining proper revenue levels and how revenues should be allocated. | A needs assessment is not directly addressed, but MDOT would be in a position to use one methodology to assess the condition of more road miles and to prioritize construction and maintenance needs. | Michigan Auditor General recommended that a Statewide process be established that identifies needs and prioritizes the use and allocation of road funds |
Physical Structure | Construction And Reconstruction Standards should be revisited to evaluate whether higher standards could be used to build roads and bridges with longer expected lifespans. Adequate resources should be devoted to Maintenance of roads already in place. | Construction and maintenance were not discussed as part of the Build Michigan II proposal. | The state has made a commitment to spend more resources on maintaining roads that are in fair and good condition. |
Administrative Efficiencies | Greater use of Privatization and/or Intergovernmental Cooperation would provide an ability to gain efficiencies, reduce duplication, and save taxpayer dollars. | Cities, villages, county road commissions, and private business would bid for contract to maintain all state trunkline roads and bridges. Act 51 would be amended to allow county road commissions to compete. | |
MTF Allocation | Measures of Highway Use, such as vehicle miles traveled or a direct measure of needs, should be incorporated in the allocation of state revenues to the local governmental units. | Allocation to county road commissions would be based 50% road miles in the county as a percent of all county roads, and 50% vehicle miles traveled in the county. Municipal allocations would not include vehicle miles traveled as a component. | Michigan Auditor General recommended that factors be identified that have a bearing on the useful life of a road or a road's need for repair for legislative consideration. |