The Building Tradesman Newspaper

Friday, November 13, 2015

State road deal finally passes, but it has plenty of critics

By The Building Tradesman

LANSING - Long-awaited legislation to increase funding to repair Michigan's crumbling roads and bridges was signed into law on Nov. 4 by Gov. Rick Snyder, but it was a bill that only its sponsors could love. It was passed by the state's majority Republican lawmakers, with only two Democrats voting for the package.

The plan would create $1.2 billion in new road repair money, but that full amount won't kick in until 2021. It involves raising vehicle taxes by 20 percent on Jan. 1, 2017, and raising the tax on gasoline by 7.3 cents a gallon and the diesel tax by 11.3 cents a gallon on the same date.

Conveniently timed to kick in two months after voters go to the polls in November 2016, the fuel tax increase would generate $400 million more annually for road repairs and the higher registration fees would add $200 million.

“The state House and Senate today approved a fiscally responsible, comprehensive transportation plan that provides a long-term solution with new revenue that also provides long-term tax relief," said Gov. Rick Snyder, who originally wanted the money to come strictly from new revenue sources like vehicle registration increases or a gas tax hike. "This is the largest investment in Michigan roads and bridges in more than half a century, making them safer for Michiganders long into the future."

Aside from the lack of providing immediate money for roads, the most controversial part of the legislation is the final $600 million for the $1.2 billion road funding plan: it would come directly out of existing tax revenue sources in the state’s $10 billion general fund. Democrats slammed the plan because the cuts are unspecified and could very well come from schools, law enforcement and local government revenue sharing. And, the plan contains an expansion in the Homestead Tax Credit, which further drains the state treasury of another $200 million per year.

“In the four months since House Republicans last introduced this plan, they’ve failed to improve on it. In fact, they’ve made it worse,” said House Democratic Leader Tim Greimel (D-Auburn Hills). “It wasn’t enough for House Republicans to take $600 million out of vital state programs – including public safety, schools and health care – they now want to undermine those programs further by giving an income tax break for the state’s wealthiest people.

"Meanwhile, our roads still won’t get the $1.2 billion we need each year to fix them until fiscal year 2021. It’s obvious this plan was made to cater to the wealthy friends of Michigan Republicans, not the average working people who drive on crumbling roads to get to work every day.”

A month ago, the roads deal was still at a stalemate, and Republican lawmakers went across the aisle looking for help from Democrats. But the Dems balked at taking such a huge chunk from the general fund to pay for road repairs, and ultra-conservative GOP lawmakers in both the House and Senate were only willing to go so far with imposing new taxes.

The plan will only generate $400 million of the $1.2 billion needed annually for road funding in its first two years, a fact not lost on the Michigan Infrastructure & Transportation Association. It's estimated that each $1 billion in new money employs about 1,000 building trades workers.

"At the end of the day, it's $1.2 billion," said Lance Binoniemi, vice president of government affairs for MITA. "We need that much investment, if not more, to improve our roads." He added: "we'd like to see it ramped up a little bit quicker."

The plan has it's share of critics. "Irresponsible, reckless, shortsighted, ill-advised, wrongheaded ... we're running out of adjectives to describe Lansing's latest plan to fix our terrible roads," says a Detroit Free Press editorial.

The conservative Detroit News damned it with faint praise: "The road bill passed by the Legislature this week is the least possible deal they could have crafted, but at least, after four years of struggle, they finally found a majority."

Said Michigan AFL-CIO President Ron Bieber: “This bill is based on fuzzy math and accounting gimmicks, and it won’t do anything to actually fix our roads for at least two years. You don’t fix the roads by cutting education, public safety, and health care, and you don’t fix the roads by giving tax breaks to millionaires while raising taxes on working people."