Michigan: Proposal 1 would boost county road funding 60 percent

By: 
Ryan Lewis, editor

The statewide ballot proposal designed to increase funding for roads will, if passed, make four changes to the Michigan Constitution and trigger eight laws.

While the effect those changes would have on taxes and state spending are complex, The Allegan County News has sought to merely summarize the basics of Proposal 1 and instead focus on how its passage would impact Allegan County in particular.

First and foremost, if passed, Prop 1 would change how gasoline is taxed.

Currently, an excise tax of 19 cents per gallon is part of the price at the pump. That would be increased Oct. 1 to 41.7 cents per gallon. The new rate would also increase over time according to a formula.

At the same time, gasoline will be made largely exempt from the state sales tax.

As reported by the Mackinac Center for Public Policy, the federal Energy Information Administration projects that the pump price could increase overall by 4 percent, to an estimated $2.49 per gallon—about a dime. It also estimates customers would pay less under Prop 1 than now if the price rose to $4.20 per gallon.

 

Allegan County

Larry Brown, managing director of the Allegan County Road Commission said the county stands to have its road funding increased by 60 percent after three years if Prop 1 passes.

That would take its $8.6 million in Michigan Transportation Fund money—the county’s share of the 19-cent gas tax and vehicle registration fees—and pump it up to an estimated $14.4 million annually.

Brown said there are no plans for that money; those decisions would be made if Prop 1 passes and throughout the next three years, as the funding ramped up to that level.

He did put the money in perspective however: currently, it costs approximately $200,000 per mile to resurface a primary road.

To reconstruct a gravel road into a paved road? Approximately $1 million per mile.

“So, you can see, even though the funding will go up, we’re not going to be able to pave every road in the county immediately,” Brown said. “But we’ll be working in the right direction.”

He also said the road commission had last purchased snow plow trucks for approximately $230,000 each.

 

Adjusting tax

The road commission supports the ballot proposal for several reasons.

Among them, that the new gas tax would increase over time to keep pace with inflation was key.

“Eleven years ago, we got about $8.6 million from the Michigan Transportation Fund,” Brown said. “In 2013? We got $8.6 million. It’s fluctuated a little, but it’s been flat for all intents and purposes.”

He says that’s because the current tax is flat. Whether gas costs $2 or $5 per gallon, no matter what year it is, the tax is always 19 cents.

“Meanwhile, our material costs have at least doubled,” Brown said.

Under Prop 1, the tax would be a minimum of 14.9 percent of the cost of wholesale gas. It could increase a maximum of 5 percent in a year or at the same rate as the consumer price index.

Brown also sees Prop 1 as the best chance that this type of reform to the gas tax can happen.

“The governor has supported increasing road funding for the past three years; nothing other than this legislation has come through,” Brown said. “I don’t see that changing.”

The road commission supports the proposal despite the long list of other, non-road related effects its passage will have, among which include:

• the sales tax will raise from 6 to 7 percent.

• $1.3 billion of the new revenue created in the first two years would pay down part of the $1.96 billion in debt the state has from past road projects.

• vehicle registration fees would increase.

• the earned income tax credit would increase (to help offset the impact on lower-income families of the sales tax hike).

• it would prevent School Aid Fund money from being transferred to bolster state university budgets.

• nearly $300 million for schools

• $100 million for local governments

The Mackinac Center estimates the annual tax burden for an average Michigan household will increase between $477 and $525 in 2016.

Indeed, despite all that, Brown said the trends he’s seeing in road funding all point to one thing: decreased service levels.

“What we’ve seen is we have less and less money to do that daily maintenance,: he said. “Much has been made of concrete falling off bridges, and that is a concern.

“What concerns me more is how much longer it’s going to take to plow these roads.”

He said the road commission had 71 full-time employees in 2007; it now has 48.

He said, “We’ve made some efficiencies in the equipment we use. And we hire seasonal help and private contractors for the plat roads.

“But if the trend continues, I’m afraid we’re not going to be able to offer the same level of service we currently are.”

By way of example, he pointed to the county’s 600 miles of gravel road. His fleet of drivers can grade about 10 miles a day to remove bumps after heavy rains.

“If Prop 1 passes, we’re not going to be able to pave all our gravel roads, but we’ll be able to do that maintenance at a higher rate.”

Contact Ryan Lewis at rmlewis@allegannews.com or (269) 673-5534.

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