The Building Tradesman Newspaper

Friday, February 07, 2020

Whitmer announces $3.5B in bonds to fix roads

By Marty Mulcahy, Editor

LANSING - Michigan's road workers and their contractors can look forward to an even busier building season in 2020 - and beyond - as Gov. Gretchen Whitmer announced a $3.5 billion plan to improve the state's road and highway infrastructure.

Whitmer announced the new money for roads and bridges on Jan. 29 during the governor's annual State of the State address. The money, delivered under Whitmer's "Rebuilding Michigan" plan, will come in the form of a bond issue and will add and expand 122 major new road projects and nearly double the existing state funding available to fix roads over the next five years.

“Our roads are dangerous, and the longer we wait, the more expensive it will be to fix them,” Whitmer said. “That’s why I’m taking action now to fix the damn roads and keep Michiganders safe. My Rebuild Michigan plan will ensure we start moving dirt this spring and save us money in the long run."

When the governor made the announcement during her address to Michigan, she knew she would have the green light to issue the bonds via a 6-0 vote the next day from the issuing authority, the state Transportation Commission. Michigan’s governor has the authority to issue such bonds without input from the state Legislature. 

The commission's vote authorizes the Michigan Department of Transportation to sell the bonds for 49 projects, which include completely rebuilding essential state-owned freeways and bridges. The vote also clears the way to accelerate another 73 projects across the state. The bond issue only covers state roads.

Issuing bonds wasn't Whitmer's first choice to pay for road repairs, and it's a stop-gap solution that immediately imposes interest costs on the bonds paying for the repairs. Michigan taxpayers are still paying the interest on bonded projects issued during prior administrations. Last year Whitmer pushed for a 45-cent hike in the state's gas tax as a more permanent means to fund road repairs, but the Republican-held legislature would have none of it - and have never issued a long-term plan of their own.

"The governor has made two proposals since she's been in office to fix the roads," said state House Speaker Lee Chatfield (R-Levering), after the State of the State address. "The first is a 45-cent gas tax on every driver in our state. The second is to take out a loan, and we're already paying back from the previous two administrations.  It's not a long-term road money proposal."

There's little argument that Michigan's roads are among the worst in the nation. The state Department of Transportation has called for some $2 billion a year in more funding. But finding a permanent, adequate, long-term source of money to pay for improvements had vexed and eluded state Republicans during the Snyder Administration. Indeed, the results of a Jan14-18 survey of likely voters in the state by the Detroit Regional Chamber found that 53 percent believe Michigan already has enough money to fix the roads, even as 29.5 percent said that it's the most important issue facing the state.

“Bonding makes sense when the degradation curve shows the cost of putting off rebuilding outweighs the cost of financing and interest,” said Transportation Commissioner George Heartwell. “As a three-term mayor of Grand Rapids, I frequently implored lawmakers to find a sustainable funding solution for roads and bridges. The fact that the Legislature is still stalling leaves the governor no choice but to employ this tool to rebuild crucial roads and bridges now.” 

The head of the state Chamber of Commerce also likes the plan. "Lawmakers have declined to take legislative action to rebuild Michigan’s crumbling roads & bridges," Rich Studley, president and CEO of the Michigan Chamber of Commerce, said on Twitter. "We commend Gov. Whitmer for taking action to fix the roads and support her plan to use state transportation bonds to rebuild major roads and critical bridges."

Whitmer's office maintains that because the bonds finance rebuilding as opposed to more temporary fixes, the roads and bridges will far outlast the payoff dates for the bonds. 

"If we’re going to fix all the dangerous roads in Michigan, Republicans need to step up and get serious about finding a long-term road funding solution for our local roads and bridges," Whitmer said. "I’ll work with them when they’re ready, but in the meantime, I’m going to get to work fixing our state roads on my own.”