Road funding stalls as state elections near

Rick Olson, a former House member from Washtenaw County, initially opposed Gov. Snyder’s call for more than $1 billion in state funding to repair Michigan’s roads. But after researching the issue, he concluded that more than $2 billion is needed in improve roads. (Courtesy photo)

At a meeting in his Upper Peninsula district a few months ago, Republican state Sen. Tom Casperson was approached by a Tea Party member, who suggested the state build a four-lane highway across the U.P.

Would he be willing to pay for it with higher taxes? Casperson asked. No way, the Tea Partier answered. Find the money somewhere else. Eliminate waste, whatever, but no more taxes.

Months later, Casperson, an Escanaba Republican, was still dumbfounded. “You want us to build a new highway when we don’t have enough money to maintain the roads we already have?” he said.

That’s the dilemma Gov. Rick Snyder is facing as he tries to win legislative approval for an additional $1.3 billion a year to fix Michigan’s roads – an amount experts who study Michigan’s roads say is generous yet may not be enough. Snyder’s supporters see two opportunities to push the increase through the Legislature this year: now when voters are angry about potholes after a brutal winter, or in a lame-duck session after this November’s elections.

Few dispute that the state’s roads are in terrible shape and getting worse, yet there appears to be little agreement over what to do about it.

House Speaker Jase Bolger and Rep. Wayne Schmidt, both Republicans, last week unveiled a plan they said would increase annual funding for roads by $500 million, a little more than a third of what Snyder is asking. The plan would eliminate the current flat 19 cents per gallon tax on gasoline and 15 cents on diesel and replace them with a 6 percent tax on a gallon of both fuels. The proposal also called for shifting some other taxes and fees, increasing efficiency in the Michigan Department of Transportation and demanding better warranties on new roads.

Snyder’s office released a statement calling Bolger’s plan “a great first step to really get and keep the conversation, and ultimate solution, moving forward.” Bolger acknowledged the plan would not raise as much money as Snyder is seeking, but he said it “offers a solid base that further solutions could be built upon.”

That could mean changing how roads are funded in the next few months, and then raising the fuel tax after this November’s election. Before last week’s announcement, Schmidt, chair of the House Transportation Committee, said he favors replacing the current gasoline and diesel tax with a wholesale tax on fuel, but leaving it “revenue neutral” for now. Lawmakers later could increase the fuel tax in a lame-duck session, he said.

“The old adage is you eat an elephant one bite at a time,” the Traverse City Republican said then. “This is the first bite.”

Whether that plan stands a chance of passing the House and Senate remains uncertain, since many Republicans oppose any tax increase, and Democrats aren’t in a hurry to help Snyder in an election year.

“I think there are about 150 people in the state who don’t believe we have bad roads,” Michigan Chamber of Commerce President Rich Studley said, before Bolger announced his alternative to Snyder’s plan. “The problem is, many of them are in the Legislature. There is no organized campaign in favor of bad roads.”

There is, however, an organized campaign in favor of raising fuel taxes and vehicle registration fees, but whether it has the political muscle to overcome opposition from Tea Party groups and their supporters is uncertain.

The state chamber is part of a coalition of more than 50 business groups, labor unions and corporations called the Michigan Transportation Team advocating for more road funding. Its members include groups that seldom agree on anything, such as the Teamsters and the Michigan Manufacturers Association.

Snyder gets it from both sides

Devoting more funds, and the jobs they would create, to road projects would ordinarily draw support from Democrats. But Dems show little interest in helping Snyder, and, in fact, see an election-year campaign issue. The Michigan Democratic State Central Committee has set up a website www.snyderholes.com blaming the Republican governor, who is facing reelection, for the deterioration of the state’s roads. “Are you mad about the roads?” it asks. “Have you ever seen them so bad? We have one person to thank for it - Republican Gov. Rick Snyder.”

But Snyder’s greatest challenge could be in winning support from members of his own party. Four Republican members of the Michigan Senate and 14 in the House have signed a no-tax pledge with Americans for Tax Reform, the Washington-based group led by anti-tax crusader Grover Norquist. Even among those who have not signed the pledge there appears to be little inclination to raise taxes, even as Michigan roads crumble.

Sen. Patrick Colbeck, a Tea Party favorite, said Snyder’s proposal stands no chance of passing this year.
“There are plenty of people with Ph.D.’s in Lansing who would like to go off and raise taxes,” said Colbeck, a Canton Township Republican. “There’s no way in heck I’d vote for a tax increase.”

Instead, he outlined a plan calling for the state to use some of this year’s projected budget surplus for road repairs. MDOT should build roads better so they need less maintenance, he said, and he suggested the state find other ways of raising money, such as selling advertising space on highway overpasses and planting hay in freeway medians and selling it to farmers.

Snyder originally asked for $1.2 billion a year in 2011, but the proposal never went anywhere. His budget this year calls for $1.3 billion, but leaves details of how to raise that open for discussion.

Before Bolger released his plan, the administration had drafted its own bill that would eliminate the current 19-cent-a-gallon tax on gasoline and 15 cents on diesel, replacing them with a tax on the wholesale price of fuel that would increase with the rise in construction costs. Gasoline and diesel would be taxed at the same rate. The plan also calls for an increase in annual registration fees for cars and trucks.

“It’s a question of getting someone to introduce it, which hasn’t been easy,” Snyder aide Bill Rustem said. “The governor put out a proposal two years ago, and all we got was criticism. What’s the alternative?”

This is the third time Rustem has taken on the issue, first as an aide to former Gov. William Milliken, later as an employee of Public Sector Consultants during the administration of former Gov. John Engler.

“This is never easy,” Rustem said of asking lawmakers to see the long-term benefits of road funding. “Term limits have made it harder, no question. If you’re there for only six years, it’s hard to look long-term at problems, but it’s necessary. Something’s going to happen. It has to.”

Since 1993, members of the Michigan House have been limited to three two-year terms and the Senate to a pair of four-year terms. “It’s almost like you don’t have time to sit down and build relationships,” said Casperson, chair of the Senate Transportation Committee.

Tax entanglements

The issue, he said, is complicated by Michigan’s unusual tax structure. In addition to the 19-cents-a-gallon tax on gasoline and 15 cents on diesel, Michigan collects a six percent sales tax on fuel, which, at current prices, is about 23 cents a gallon. As a result, Michigan’s total tax on fuel is among the highest in the nation.

But the six percent sales tax is earmarked for education and the state’s general fund, not for transportation.

Casperson proposed eliminating the sales tax on gasoline and diesel, raising the fuel tax for road improvements, and then finding other money for education and the general fund, possibly with a 1-cent increase in the sales tax on other products and services. The problem is that changing the sales tax would require a statewide vote of the people, never an easy task. On the other hand, it would give legislators political cover, since it would be voters, not them, increasing the tax.

Looking for waste, finding none

Former state Rep. Rick Olson said he understands the reluctance of his former colleagues to raise taxes, especially in an election year. The one-term Republican from Washtenaw County, said he was skeptical when Snyder called for the $1.2-billion-a-year increase in fuel taxes and registration fees three years ago. “I kept asking questions and asking questions, because I didn’t quite believe the number,” Olson said.

As a member of the House Transportation Committee and with a Stanford law degree and a background in statistics, he began digging into it. He looked for waste in the state transportation budget, and “I kept coming up dry,” he said. “I just didn’t find it. At some point you have to conclude it’s just not there.”

Olson left the Legislature in 2012 after his seat was redistricted into a more-Democratic leaning one, but he continued working on the issue as a volunteer. Now employed by the House Republican Policy Office, Olson emphasized his opinion on road funding is his own personally.

After feeding data on the conditions of Michigan’s roads into an MDOT computer program, he concluded the $1.2 billion (since raised to $1.3 billion) Snyder was seeking isn’t enough. It likely would take closer to $1.4 billion yearly to maintain the roads as they are, he said, and nearly $2.2 billion a year to improve them.

“When I actually dug into it and found out what the facts were, I became a believer,” Olson said. “I didn’t want what I got, but that’s what the facts showed.”

As for his former colleagues in the Legislature, “Maybe enough of them will have the courage to do what needs to be done,” he said. “That’s my hope. Is it likely? I don’t know.”