VII. Enhancing the Transportation Infrastructure

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 county roads.

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 maintaining roads.

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:

  1. 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.

  2. 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.

  3. 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.

  4. 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 subsidies.

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 winners.

73. Enact cost-reduction ideas proposed in the Mackinac Center for Public Policy report, "Fixing the Roads: A  Blueprint for Michigan Transportation Infrastructure Policy."

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 MDOT.

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