Michigan's transportation system is crucial to the state's economic
progress. In 1997, the Legislature raised the gasoline tax, enacted reforms to
cut the costs of road building and maintenance, and embarked upon a major,
long-overdue repair effort. With the condition of the roads now clearly
improving, transportation funding and related issues have slipped off the radar
screen of the public and the Legislature. The Legislature should elevate
transportation issues once again and address the following four reforms.
69. Reform the system for the maintenance of state roads.
In most counties, the Michigan Department of Transportation (MDOT) contracts the
maintenance of state roads to the counties themselves; however, in a limited
number of counties, MDOT maintains its own roads with its own facilities,
equipment, and personnel, and the county road commission works only on the
In those counties where MDOT does its own work, it should request bids for
the maintenance of its roads from the local county road commission, any
neighboring commission, and private contractors. While it may prove that MDOT
continues to be the best source in these counties, the duplication of resources
for state and county roads in a given county makes little sense, and MDOT should
be encouraged to leave the maintenance business whenever possible. In those
counties where MDOT currently contracts with the local road commission, the
entire county's work should be put out for bid from the local county,
neighboring counties, and again, private contractors. While the local county
road commission may continue to be the best contractor, the open bidding process
would be a valuable one in its own right.
70. Allow counties the option of abolishing their road commissions.
Michigan is the only state in the union with separate, independent county road
commissions. While there are many exceptions, the commissions can be patronage
machines at their worst. With the state and federal governments providing the
bulk of money for county and local operations, there is little incentive for
local government to consider changes to an age-old system that offers many
public employment jobs and too often tolerates poor performance and high cost in
The Legislature should at least allow counties the option of terminating this
unnecessary level of bureaucracy by allowing for the dissolution of independent
county road commissions and giving the money it now provides to the road
commissions directly to county commissions and county executives.
71. Evaluate the formula for distributing road funds.
Since 1951, most state road tax and fee revenues have been divided according to
a controversial formula that provides 36.1 percent to state government, 36.6
percent to county road commissions, 18.8 percent to cities and villages, and 8.5
percent to transit agencies. The Legislature must review the formula by which
state fuel and vehicle-registration taxes are distributed.
There is no particular merit to these percentages; they are the result of many
amendments to the original formula of 1951, proposed in response to transient
political forces. The formula has grown complicated, and the original guiding
principle has been forgotten under layers of amendments and handouts to favored
programs. The heated discussions of the formula and how it might be changed have
degenerated into a free-for-all, with each level of government arguing for a
bigger share of the pie. Local units in particular seem to want to turn the
formula into a revenue-sharing scheme first and foremost. Which roads attract
the most actual traffic has taken a back seat to the grab for more money.
There may be no one right way to distribute motorist taxes, but before the
system is overhauled, legislators should adopt these principles to guide any
future debate about formula changes:
These revenues do not "belong" to any agency, geographic area, or unit of
government. They are motorists' fees for the use of the road system, given in
trust to the Michigan Transportation Fund to be distributed in proportion to
motorists' and shippers' needs.
State aid should be focused on the routes of statewide importance, as
indicated by the proportion of long-distance or other trips that cross
jurisdictional lines. Taxpayers depend on the state to assure a uniform,
adequate system that carries them across city limits and county lines.
Funds should follow the traffic. The distribution of funds among state,
county, and city systems should be guided first by the distribution of vehicle
miles on those systems. Formulas that unduly favor route miles, population, or
other factors risk cross-subsidy of little-used roads and congestion in the
state's busiest places.
Purely local needs should be addressed by local funds. Local taxpayers
know best whether local roads deserve more investment. The Transportation Fund
should not be treated as a revenue-sharing scheme to which every local
government is "entitled."
The distribution formula should be simplified, and earmarked funds and
special programs should be eliminated. If the formula is adequate, clumsy fixes
like the Local Program, the special distributions of the 1997 tax-increase
revenues, and the Economic Development Fund (which dispenses transportation
dollars to localities according to the number of jobs new industries in their
areas claim to have "attracted" or "retained") will not be needed.
Although the share of motorists' taxes given to mass transit was reduced in
1997, the total amount given to transit continues to increase. The Legislature
should permanently reduce the mandated share of gas tax revenues allocated to
mass transit. The 1990s saw palatial bus stations built on potholed streets that
made every bus trip a trial; possibly the best thing that could be done for
transit in Michigan is to devote more transit aid to road repair.
It's also time to clear the books of the $100 charge paid by Michigan truckers
for the privilege of being regulated by the Michigan Public Service Commission.
Trucking has been deregulated, and there is no clear authorization for the use
of this money for anything.
72. Avoid micromanaging transportation technologies through tax policy or
Invariably, when the Legislature gets around to addressing transportation
issues, some lawmakers are tempted to get into the business of picking winners
and losers. The Mackinac Center cautions against any legislation designed to
provide artificial boosts to gasohol, electric cars, propane burners, passenger
trains, flywheel-powered buses, and other politically favored (but not
necessarily economically viable) technologies. Government is not good at picking
73. Enact cost-reduction ideas proposed in the Mackinac Center for Public
Policy report, "Fixing the Roads: A Blueprint for Michigan Transportation
Seven years after its publication, the Mackinac Center's "Fixing the Roads"
report continues to be one of the most comprehensive of its kind, with many
suggestions for reform that deserve renewed attention in the Legislature.
These reforms include increased competitive bidding for road repair and
construction projects, changes in land acquisition procedures, greater
application of value engineering concepts in road type and design standards,
tort reforms to minimize frivolous claims and payments, and the streamlining of
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