As part of any possible tax proposal, the Governor should form a Michigan Commission on Highway Infrastructure Reform to study and report on ways to reinvent the roadbuilding and maintenance system. Just as with welfare reform, we need to re-examine the entire system, and consider fundamental changes. Possible changes that a Commission should consider include reforms in the organization and operations of state, county and city road operations, and the interface between these entities. The role of county road commissions as independent entities should be specifically considered. Such a review makes good sense given the $691.5 million in Michigan Transportation Fund monies that will be turned over to local governments this year with little oversight or knowledge about how well the money is being spent.

Aggressive reforms in the organizational structure and methods of securing highway infrastructure construction and repair could generate substantial savings that would help to reduce the size of any tax increase.

The proposed commission should also investigate the way other states operate at the local level, the productivity of existing operations relative to other states, the potential for savings, and possible state incentives to eliminate duplication and improve productivity and efficiency. The Commission should also examine opportunities to eliminate duplication between state and county operations and potential savings from consolidations or increased contracting relationships, and the potential to increase the privatization of state, county and city highway operations.

Aggressive reforms in the organizational structure and methods of securing highway infrastructure construction and repair could generate substantial savings that would help to reduce the size of any tax increase. In 1992 counties and local governments spent $920.0 million on road work, with most of the money coming from federal and state user taxes. A reinvention of how government and the private sector function in the roadbuilding and maintenance business can save at a bare minimum 10% of the current maintenance costs. This would lead to savings of $64.3 million per year, or 1.4 cents per gallon of gas tax which could be used for needed local government investment increases. In addition, the author believes that the above reorganization and privatization ideas can save money on the state trunkline system. Even if a 10% savings were limited to additional privatization of the $138.8 million in state trunkline maintenance activities, a total of $13.8 million per year would be saved, or .3 cents per gallon.