Will Michigan's motor fuel taxes rise in the near future? More importantly, should they rise and if so, by how much? Those questions are before the Legislature and may well be resolved in 1995. One way to handle them is to blindly pursue business as usual--simply add up what the bureaucracy says it needs to fix the roads and raise taxes to bring in that amount of revenue. A more creative approach involves strategies to reduce costs and get more "bang" for the taxpayers' dollars. Furthermore, even with implementation of substantial cost savings, policy makers must not jeopardize Michigan's recent progress in reducing the burdens of government and making its business climate more competitive. If fuel taxes are raised, offsetting spending and tax cuts should be identified.

An efficient transportation system has played an important part in Michigan's economic development over the years, and government has had an important role in assuring that appropriate transportation infrastructure has been in place. However, the organizations and methods for planning, funding, maintaining, and constructing a transportation infrastructure need to be reevaluated to assure we are getting the most effective system for the money invested. In short, we need to reinvent the planning, funding, constructing and maintaining of transportation infrastructure in this state. Serious questions need to be raised about the kinds of projects we fund, how we raise funds, and the organizations that we use to build and maintain roads and other transportation systems.

There has been much press coverage in recent months about the issue of a gas tax increase, but this discussion has not addressed the real question. The question is not how much funding is needed, but instead how can we obtain the required transportation infrastructure in the most efficient and effective manner? When one redefines the question in this way, the issues that need to be addressed include the amount of investment needed, the cost of obtaining that infrastructure, and only then, the amount and form of any possible tax increase that may be needed.

If additional investment can be justified and a tax increase is required, those who use the highway system will have to decide whether the benefits of improved infrastructure will outweigh the additional direct costs. For citizens and other automobile users, the potential benefits of additional investment relate to less congestion and delays, and a better overall quality of life. Auto owners could also benefit from lower auto maintenance and repair bills if road conditions are improved.

For businesses, employees and consumers that use the system to transport intermediate and finished goods, potential benefits are lower distribution costs and prices, improved competitiveness and more Michigan-based manufacturing facilities as a result of reliable, delay-free delivery times and reduced damage and maintenance costs for trucks and their cargoes. Users of the freight transportation system do not have any interest in infrastructure for its own sake; instead, they need a system that offers the lowest possible transportation costs with the best reliability. Economic deregulation of trucking services and prices now required by the federal government will help to lower costs and improve service, and infrastructure improvements might provide additional benefits that would exceed any increased costs. If diesel tax increases are justified, users of the freight distribution system would want to see at least some offsetting benefits, such as complete trucking economic deregulation, and a move towards "one-stop" shopping for permits which now must be secured from five state departments.

One must understand Michigan's existing transportation system, spending levels and funding in order to analyze the level of need and consider potential methods and benefits of funding any additional investment. The following section examines the current system and its funding. Then, issues related to the trucking industry, and revenues and costs associated with the industry are examined. Additional sections consider the level of funding needs, opportunities to fund increased investment through reduced costs, net investment needs after all savings, and some options for raising any additional revenue that may be needed.