When Gretchen Whitmer won the election for governor in 2018, residents knew that her first year in office would be about road funding. She ran on a platform of having more money in Lansing for roads, schools and her other priorities. But her first year in office demonstrated that not even governors get everything they want.
Residents had to wait until March before the governor unveiled her budget plan. It included a call to raise fuel taxes by 45 cents a gallon, with 14 cents of the tax going beyond road funding and into her other priorities, like K-12 education and Medicaid.
Mackinac Center scholars, myself included, pointed out that Michigan lawmakers had looked within the state budget and found $1 billion in extra money for roads over the past eight years — roughly a 50% increase from the end of the Granholm administration. That was in addition to the $600 million increase in taxes lawmakers approved in 2015.
We also found that road funding was at all-time highs. If Michigan was having a problem in improving its road conditions, then costs need to be looked at just as well as revenue.
And we noted that there is both extra money in the budget generated by the state’s growing economy and plenty of areas to cut if our elected officials want to make roads a higher priority. These included the state’s ineffective business subsidies and grants to superfluous local education bureaucracies.
Republican legislators apparently took our messages to heart because, after trying to work out a budget deal, they passed a budget that made roads a high-profile use for the state’s growing revenues. Indeed, lawmakers found 91% of the total amount of state road funding the governor wanted to spend, and did so without raising taxes.
But the governor wanted a tax hike more than extra road revenue. She vetoed a chunk of road funding and transferred some more money away from roads to local transit services and left the transportation budget at 82% of what she first asked for.
Even when legislators and the governor got together to iron out their budget differences at year-end, they weren’t able to agree that the state should spend more money on transportation. So, despite the governor’s campaign slogan, taxpayers are going to spend less on roads this year.
Legislators and the governor will continue the discussion about road funding, and it will likely be the top fiscal issue of the legislative year. Here is an overview of the options they will consider.
First, either side could bend. The governor could acquiesce to more road funding without a tax hike, or legislators could go along with the governor and pass one. After all, there is inherent pressure to compromise. Legislators and the governor know that they have to work together in order to pass laws, and there are more issues than road funding to consider. So the current stalemate may break if some lawmakers intensely want to get some other things done.
Alternately, they could decide to borrow to spend more on road repairs. The further along negotiations go without one of the sides bending, the more likely it is that this will happen. The new debt would be used to improve current road conditions at the expense of other spending priorities in the future, plus interest costs.
Finally, if legislators insist that a tax hike is not popular and the governor insists that it is, both sides may be tempted to put the question on the ballot to end the debate.
And in a divided government, public opinion matters. On disputed matters like this road funding debate, lawmakers have to rely on their guts to determine what is popular among the options they are presented. And while the governor has been pressing them to cave on a tax hike, so far, legislators haven’t bought it and believe the state can afford to improve road quality without one.