Five Road Funding Principles

Mackinac Center President Joseph Lehman lays out a free-market approach to pay for roads

One might live a lifetime without witnessing a political trouncing like the one voters delivered to Proposal 1 on May 5. The complex measure to annually devote $1.2 billion more for roads by raising taxes $2 billion didn’t just fail, it was vaporized in an historic 20-80 rout.

Some Prop 1 proponents say they now discern a new consensus to raise taxes to fix the roads, even though that is not the most obvious interpretation of their 60-point margin of defeat. While Prop 1’s failure may have made even a small tax increase more difficult, the Mackinac Center’s ideas remain untarnished by the blowout.

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So what are the Mackinac Center’s road funding principles? We point to the free-market ideal — True North, if you will — and chart a path that leads there even when it’s not yet politically possible.

We have a way of patiently helping the politically impossible become politically inevitable, to borrow Milton Friedman’s phrase. Our two-decade march for right-to-work comes to mind.

Might a consensus now form around our approach to roads?

  • Advocate for high quality, well-funded roads as a public good that serves taxpayers’ interests. Taxpayers will pay for poor government roads one way or another — through excessive taxes, vehicle repairs, or an impeded economy. Even Adam Smith, the famed originator of the free market’s “invisible hand,” did not oppose basic government infrastructure.
  • Illuminate inefficient road spending practices and recommend reforms within road agencies. Repealing the prevailing wage law is a modest start.
  • Retain the user-fee principle. Those who drive more should pay more. The per-gallon fuel tax approximates a user fee. Our road tax structure should easily accommodate emerging technology, which will make pay-by-the mile, pay-by-the-ton, or both, instant and frictionless for any type of vehicle, including hybrids. Oregon is experimenting with this.
  • Identify and recommend ways to assign more money out of current revenues to roads. This means reassign state spending from programs with lower priority to the roads until they are adequately funded (and we believe an additional $1.2 billion is the right number). My colleagues Mike LaFaive, James Hohman and Jarrett Skorup have done more than anyone to identify more than $2 billion in questionable spending that could be devoted to roads. The Michigan Economic Development Corporation consumes hundreds of millions of public dollars, much of it doled out as corporate welfare in a program cloaked in secrecy and whose results hardly ever match its boastful claims. So start with the MEDC. It’s hard to think of a state asset more central to economic development than decent roads.
  • Refrain from advocating for bigger government overall. Imposing new road taxes should be a last resort as long as lower priority spending remains untouched.

State House leaders recently introduced a plan that embraces most of these principles, even prioritizing future state revenue for roads so that they get more resources with no tax increase. If a final compromise does include a tax increase, we’ll be cheering in direct proportion to how much of the total road funding package comes from reprioritizing current spending. That would represent progress compared to the conventional mindset of seeking all the new road money from a tax hike. And it’s one step in the direction of True North.


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