A Bridge primer: Untangling the pothole promise of Proposal 1

Proposal 1, the May ballot question, seeks to raise money to fix this and thousands of other potholes pocking Michigan roads. (Photo by the League of Michigan Bicyclists via Flickr; used under Creative Commons license)

First of two parts

David Schell never saw what hit him as he was driving southbound on I-75 in Oakland County on a bitterly cold February afternoon. But he felt it, as broken concrete coming apart flew up into his 2012 Honda Fit with a force “like an IED,” Schell said. “It really felt like a bomb.”

The tires briefly lifted off the road surface, the oil and radiator lights came on immediately and smoke and steam streamed from under the hood. Fighting for control, he was able to wrestle the Honda across two lanes to the shoulder, where it immediately died and never ran again. Killed by concrete, a total loss.

“Looking at the car from the outside, you would never know what was wrong,” Schell said. “But underneath, it bent the frame eight inches and blew three giant holes in the underside of the engine.”

As many as 25 cars were damaged by rough pavement on I-75 that week, leading to lane closures and emergency repairs, as well as thousands in property losses.

Schell's misery is shared across the state as Michigan faces an ironic reality for the capital of the American auto industry: It has some of the worst roads in the nation. According to the most recent analysis by the Transportation Asset Management Council, Michigan’s roads are falling apart, and falling apart fast: In each of the past five years, more federal-aid roads (interstates, state routes and U.S. highways) declined than improved. And in just the past year, about 20,000 lane-miles of roads declined. By comparison, in 2013, 3,600 miles declined. Only 12,000 miles improved last year.

In the transportation council’s recent data, far more Michigan roads are considered in poor or fair condition than good. As for bridges, scores are distinguished by plywood sheets installed on the underside to keep deteriorating concrete from falling on passing cars.

None of this will come as news to any motorist who has to drive in Michigan and, in fact, the condition of the state’s streets, highways and bridges are not in dispute.

How to raise the money to fix them is.

On May 5, voter will cast ballots on Proposal 1, which would raise the state’s sales and use taxes from 6 to 7 percent. The proposal is 189 words long, not counting the “yes” and “no” at the bottom of the ballot. Proponents of Proposal 1 call it a long-term fix for a complicated problem; its detractors portray it as a Christmas tree hung with special-interest goodies.

No one calls it simple.

A tangle of legislation

How complex is it? The Citizens Research Council of Michigan, the nonpartisan policy analysis organization, held a recent webinar on the subject, walking through each piece of the proposal and explaining its fiscal impact on the state’s budget and taxpayers. It took 51 minutes, before the Q and A. Similarly, a House Fiscal Agency analysis runs eight pages.

But Jase Bolger, the former House speaker who helped craft the package of 10 separate bills, plus a joint resolution, passed in the 2014 lame-duck session and tie-barred to the successful passage of Proposal 1 in May (meaning they only go into effect if Prop 1 passes), insists it is, at its roots, simple.

“By adopting Proposal 1, voters will insure that all taxes paid at the pump will go to fix the roads, and will protect the funding source for schools and local government,” he said. “That’s it.”

In its simplest terms, that’s correct. But in describing how that happens, Proposal 1 can be a bear to explain. So here goes:

Passage of Proposal 1 would set off something of a legislative Rube Goldberg machine, as the 10 bills move money around and change the way some government functions (primarily schools and municipal revenue sharing) are funded. It’s complex because the existing structures are complex, and the aim is to untie at least part of the knot.

The aim is also to accomplish what lawmakers and state residents claim to want ‒ that all taxes paid on gasoline go to the state’s transportation budget. Currently they do not; a 19 cent-per-gallon tax (15 cents for diesel) does, but the state sales tax is also levied on gasoline, and not much of that money goes to roads at all. Rather, it funds the state school aid fund and municipal revenue sharing. These earmarks, as well as the rate itself, are in the state’s constitution, and raising the sales tax won’t divert any of that money to transportation.

What Proposal 1 does do is remove the sales tax from gasoline and institute a gradually rising (and inflation-adjusting) higher fuel tax to raise more money for road repair and maintenance. The sales/use-tax increase is to make whole schools and municipalities from the losses that taking away gasoline sales would cause. It’s estimated the new fuel tax would have motorists paying about a dime a gallon more at current gasoline prices.

Proposal 1 seeks to make other changes that lawmakers hope will mitigate some of the pain from these tax revisions.

Because sales and gas taxes are considered regressive ‒ that is, that take up a larger share of the income of lower-income residents ‒ the proposal would also raise the Earned Income Tax Credit, claimed by taxpayers in those income brackets. That, it is believed, will offset the impact on those households.

The package also improves and extends warranties for road construction, to make contractors more accountable for the long-term quality of their work. It increases fees charged to heavy truck operators, which account for more wear and tear on roads. It also increases registration fees for those operators. And car owners would no longer have depreciating registration fees, as they do now.

Multiple other widgets would be fiddled with, including tweaking the percentages of the sales/use taxes allocated to schools and municipalities, as well as how the school aid fund can be spent.

A knot untangles, and money comes out

All of this would raise an additional $2.1 billion in the 2015-16 fiscal year, but not all of that would go to roads. The House Fiscal Agency report estimates that in the first two years, $1.3 billion would go to paying down debt the state incurred when it financed road repairs following a 1997 attempt to deal with the problem.

Mass transit would get a $27.2 million funding boost in the first year, again because of a constitutional provision that public transit get up to 10 percent of the state’s transportation fund. The state’s Recreation Improvement Account, used to maintain state recreation facilities and trails, would pick up $20 million, also because of earmarks in the transportation fund. The school aid fund would get another $390 million. And the state’s general fund picks up about $300 million.

Is your head spinning yet? Paul Mitchell’s isn’t, but steam is pouring out his ears.

Mitchell, head of the Coalition Against Higher Taxes and Special Interest Deals, one of several organizations opposed to Proposal 1, sees all of the above as shenanigans.

“In order to fix our roads, we have already $700 million in other spending,” he points out. “What do recreation trails have to do with this?”

He goes on: Schools get a big cash infusion. The revenue sharing with local governments rankles. And what about those debt payments?

“If (the roads) are life-threatening, why is only $400 million being spent on them in the first year?” he asked. “The debt can be paid off anytime.”

The answer, the Citizens Research Council analysis suggests, is simple: Political realities.

“As demonstrated by the failures of previous transportation funding plans, it is difficult to build a coalition of legislators willing to vote to raise taxes,” the CRC wrote. “The package contains provisions aimed at garnering that political support. Schools and local governments are not only prevented from incurring a loss, but gain some revenue under the plan. The state Earned Income Tax Credit is raised to appease those who are worried about the disproportionate impact of the increased sales tax on lower-income households.”

Bolger agrees, essentially. The plan needed bipartisan support, and to do that, “we got into a room with a dry erase board and asked, what do people want to achieve? That taxes go to roads, that this be a permanent solution, that we protect schools and local police and fire budgets, and that the working poor are protected. Those were the primary issues.”

No easy road

The voting public does not seem to agree. A recently released EPIC-MRA poll shows strong opposition to the proposal, which grew from two-thirds to 70 percent once voters actually read the ballot language.

Lawmakers who worked on the proposal acknowledge it is complicated, but say complicated problems rarely have simple solutions.

“One hundred forty-eight lawmakers for two decades have been trying to put together something we all can agree on,” said Rep. Marilyn Lane, D-Fraser. “This has bipartisan support. There must be something good about it.”

Not to a voter like Tim Prophit of Grosse Pointe, who said he plans to vote no, in part because he sees Proposal 1 as a failure of the legislative process. “They’ve run out of trust,” Prophit said. “No one can trust them to do their job anymore, and for good reason.”

Bolger called upon voters to educate themselves.

When he talks to groups about Proposal 1 – he is publicly supporting the measure – he said “People are frustrated at first, but they leave understanding. I understand the frustration, but if the public wants to make sure (the money) goes where it’s supposed to go, voting yes on 1 is the way to do that.

“Do we not trust people enough that they are able to look at big issues and understand?”

Prognosticators looking for a gauge of how hard this will be to sell might check in with David Schell, the driver of the destroyed Honda Fit. Even he hasn’t decided yet.

“I want to consult with Sen. Mike Kowall (R-White Lake) before making up my mind,” Schell said. “He is a friend of mine. I’ll talk to him soon.”