In Michigan, our current budget benchmark for roads is $3.3B. Most transportation officials agree that we need an additional $1.2B to keep the condition of our current road system from degrading further. In other words, it costs taxpayers $4.5B to maintain our state’s current transportation system.
There is widespread agreement that we need to find a sustainable solution to maintain our transportation system. Where there is disagreement is on the topic of how.
One side of the argument asserts that we need to raise $1.2B in taxes to maintain our roads. Those who favor this side of the argument like to cite polling numbers that assert that voters would support tax increases if the tax increases were dedicated to the roads.
I believe that we should also ask the question, “Would you prefer a solution that fixes the roads without increasing taxes or cutting schools or cutting police and fire?” Most of our citizens would say “yes” to this question which leads me to the other side of the argument. Sir Winston Churchill once sagely opined during budget discussions, “Gentleman, we have run out of money. It is now time to think.” In this spirit, I believe that we need to pursue ways to reduce the costs of maintaining our roads by at least $1.2B.
It is possible to do so. The key to doing so is to “upgrade” our roads from our current, dilapidated “Version 1” road system to a higher quality “Version 2” road system.
Did you know that there are ways to build roads that last up to 4 times as long for only 15% additional upfront expense? In other words, if our entire road system were to be “upgraded” to such a “Version 2” road system, our $4.5B budget target could be reduced to as low as $2.5B…which is $800M lower than our current transportation budget!
True…it would cost more initially to upgrade our roads to a higher quality Version 2 system. That means that we will need to initially re-prioritize slightly over 2% of our current $54B state budget. Speaker Cotter recently set the tone for this discussion when stating the following in context of the House Roads Plan, “We are going to take care of our needs first and our wants later”.
Where does this discussion lead in tangible numbers? For FY16, we could dedicate 100% of the $356M bump from our May revenue forecast to roads. We could also allocate $212M earmarked for the budget stabilization fund and still retain a $400M fund balance sufficient to protect us against the historical +/- 4% revenue forecast error. If we were to dedicate 100% of all 1-Time and incremental FY16 general fund spending to roads, schools, and local governments, we could add another $98M.
Another $199M could come from the Michigan Strategic Fund which would in essence temporarily substitute targeted economic development subsidies for a broad-based economic development incentive in the form of a better transportation infrastructure for everyone. Another $299M in funding could come from opening up a subset of the 344 state restricted funds to free up additional funds for roads. This yields a total of $1.2B in incremental road funding…WITHOUT raising taxes or cutting K-12 or cutting police and fire. Furthermore, the amount that needs to be re-prioritized would decrease each year as more and more of the roads are upgraded.
The bottom line is that, if we were to make higher quality roads a priority today, we would eventually need up to $800M LESS to maintain our roads not $1.2B more. It comes down to a discussion of priorities. Tax increases simply push the prioritization discussions from the halls of Lansing to the kitchen tables of our citizens. It is time to upgrade our discussions about how to fix the roads and focus on ways to prevent forcing even more of these kitchen table discussions. When we do, I believe you will join me in asserting that it is time to upgrade our roads.