Policy Reform Recommendations

Three key categories of reforms recommended in this study should be tie-barred to any increase in taxes for roads. The first reform would dedicate a large percentage of newly raised state money to critical economic development roads by designating a high-priority road network. These roads should be selected and targeted for investment irrespective of which government entity owns them. The network would consist of the National Highway System roads plus another 10,000 miles of the most important arterial roads. Arterial roads would be selected based on economic importance, vehicle miles traveled, commercial truck importance, etc. Four cents per gallon of the gasoline tax and all 10 cents per gallon of the diesel tax increase ($291 million per year) plus half of the index funding increases should be directed towards this network. State-owned roads would be limited to 69.1 percent of the system, with county and city roads representing no more than 21.2 percent and 9.7 percent of the miles respectively. The roads would be selected by a committee of state, county and city road officials and will allow the state to focus significant monies on key roads without changing jurisdiction or geographic funding formulas.

The second key reform is to promote consolidation in the number of road agencies involved in Michigan road building and maintenance. Act 51 should be changed to allow counties to consolidate road commissions into general county government and regional authority language should be included to specifically provide for contiguous road agencies to form regional road authorities. The Legislature should also consider requiring cities receiving less than $150,000 in MTF funding to contract with neighboring cities or their county.

The third set of key reforms relate to a variety of spending efficiency proposals:

  • Eliminating prevailing wage laws;

  • Making changes in state trunk line maintenance, including putting out to bid all state work in each county;

  • Getting the state out of the business of doing its own maintenance on state roads in those 21 counties where this is still occurring;

  • Consistently requiring design and build warranties;

  • Increasing the use of scorecards;

  • Increasing performance auditing of state and local road agencies;

  • Improving the state’s control over the type, length and cost of environmental impact statement studies;

  • Consolidating mass transit agencies in southeast Michigan; and

  • Reviewing the previous recommendations of the last Governors/Legislative Transportation Funding Committee in 2000.

Given our recommended emphasis on directing most of the new state raised tax dollars to the high priority network, and our recommendation that counties be given the option to raise local money for local roads, we propose that just 1 cent per gallon of the gasoline tax increase, but all the proposed registration fee enhancements, totaling $146.5 million per year, be directed into the existing formulas for distribution to state, county and city roads. Half of all index funds should also be directed to the formulas.

We also propose directing the last 1 cent per gallon of gasoline tax increase into a Local Incentive Match Fund that would be designed to incentivize three actions. This local incentive money would be used to encourage local governments to increase both public and private funding of local roads, and to provide incentives for consolidation and other local cost saving measures. One third of the money would go into a subfund to encourage local funding of local roads through local property taxes, special assessments, etc. This subfund would be augmented with $10 million per year of existing local formula money for a total incentive sub-fund of $27 million per year. Currently, Michigan local governments are far more dependent on state transfers for funding than is the case in other states. Another third of this money would go to partial match incentives for increases in local private funding. The final third, plus an additional $30 million of existing local formula money that we recommend be considered, would go into a subfund to promote consolidation and cost sharing between the 616 local road agencies. This $47 million per year would be available for partial match grants to local entities showing cost-savings from consolidation and/or other efficiency programs.

Other recommendations include:

  • Appointing a legislative transportation committee or expert panel to reevaluate the recommendations of the Legislature’s 1998 Transportation Funding Study Committee.

  • Creating a study committee to consider: replacing registration fees with fuel taxes; altering or replacing gasoline and diesel taxes; and taxing electric, hybrid and alternative fuel vehicle road usage.

  • Enacting legislation to provide for and regulate developer impact fees.

  • Considering whether county road commissions, or alternative county road organizations, should have the authority to request a county millage vote for roads.

  • Reviewing the extent to which private bidding is being required on state and local construction and maintenance projects, the effectiveness of the existing requirements and the potential need for more guidance on bid requirements.

  • Studying the costs and results of the southeast Michigan expressway message board system. While millions of dollars per year have been spent, signs often don’t work and often provide meaningless information when they do.

  • Requiring additional electronic signage and/or local site FM radio stations where drivers can get information regarding state, county and city road construction projects.

  • Requiring signage on high vehicle miles traveled roads that tells the public what agency owns the road and provides a phone number for reporting potholes and other issues.

  • Requiring local agencies to remove any remaining “paper” road mileage from their systems. These often are subdivision roads that were platted but never built.

  • Investigating whether recycled materials should be used in the construction of Michigan roads. Recycled materials that are mandated in Ohio are banned here.

  • Considering requirements for planning coordination between local road agencies and local public works (sewer, water) agencies to avoid reworking the same road segments for multiple projects.

  • Considering the use of variable direction lanes on some congested roads as many other states do.

  • Reevaluating the need for a new Detroit-Windsor bridge given that auto traffic has fallen by more than 25 percent and truck traffic growth has been flat since Sept. 11, 2001.

  • Implementing truck and auto electronic tolling at the Blue Water Bridge and urging the Ambassador Bridge owners to do the same.

  • Passing legislation to provide for heavy truck “one-stop shopping” for all truck licenses, registrations and fees. Currently truck owners must deal with five separate agencies.

  • Repealing the $100-per-truck registration fee for economic regulation provided for in a 1933 law since the Public Service Commission is preempted from regulating virtually all aspects of intrastate trucking.