When Gov. Snyder signed the long-awaited road funding package in 2015, he referred to it as a “good start.” Most industry experts who had fought for years to secure the package considered it to be too little, too late.
The 21st Century Infrastructure Commission, created by Gov. Snyder, delivered their report to the Legislature in December 2016. The Commission found that Michigan needs to spend roughly $4 billion more a year on funding infrastructure; $2.2 billion of that for roads.
A recent report by Moody’s Investors Service found that Michigan has invested in public infrastructure – including roads – at a lower rate than other states over the past 15 years. Michigan’s rate of investment withered faster than any state except Florida and Nevada.
According to a report by Gongwer News Service, Michigan spends $470 per capita annually compared with the national average of $795 per capita. This funding gap is expected to increase as demands increase in other budget areas, including teacher pensions and municipal funding reform.
Moody’s issued a warning that Michigan’s policy makers should head. As print by the Gongwer News Service:
“As to what deferred capital investment means for the state’s credit, Moody’s said it is “effectively an expensive and hidden form of borrowing.” States can often temporarily solve budget problems by delaying a capital project or raiding a pool of funds intended for capital investment, the analysis said, and deferred maintenance is a “tempting option” because the consequences are very long-term and not readily visible at first to the market.”
Road Funding campaigns in Michigan for at least the past 30 years have had one common denominator. The final package approved by the legislature has not come close to meeting the state’s needs.
Even so, MDOT and local road agencies are moving forward with the revenue from the 2015 package, working diligently to preserve roads and bridges and rehabilitate or reconstruct failed assets. They are mindful, however, that much of the new funding promised is dependent on Legislative appropriation and is not guaranteed.
In their 2015 Annual Report, the Michigan Transportation Asset Management Council noted.
“Half of the new funds included in the Michigan funding package, and all of the new federal funds approved will be coming from the general funds of the State of Michigan and the United States. Unlike the fuel taxes and registration fees which, once adopted, are dedicated to transportation purposes, the allocation of general funds to transportation is subject to the annual appropriations process. Michigan is currently facing several challenges outside of transportation that will be competing for those future general fund appropriations. Because of Michigan’s term limits, most of
the legislators who passed the Michigan funding package will not be in office when the time comes to appropriate those promised dollars to transportation purposes.”
Clearly there are several significant challenges ahead for Michigan’s budget and the Legislature will be faced with difficult choices. Funding for roads, bridges, dams, water and sewer must be a priority.
Continuing to disinvest in infrastructure – as Moody’s noted, an expensive and hidden form of borrowing – may be tempting as road agencies begin to make long-awaited repairs to road and bridges. But continued disinvestment could hold devastating long term results for the state budget, state residents and Michigan businesses.
The only way to prevent another Flint, or perhaps a greater catastrophe, is to properly invest in the core function and responsibility of government – infrastructure.