Claimed State and Local Investment Needs

Michigan Department of Transportation officials estimate that the state has some $20-$30 billion in long range transportation needs .21 However, state officials have developed a priority list of some $3.1 billion in state trunkline needs over and above current funding levels. In 1992 the Engler Administration initiated the $200 million "Build Michigan" bonding program to allow initial planning and construction on the priority trunkline needs and in order to match new federal aid. The program allowed the state to begin planning and design for key roadway construction projects, to begin repairs or replacement of some 1,000 highway bridges, and to begin actual construction on portions of some 7,500 miles of roadway. Table 3 lists some of the key projects. The program also allowed the state to dedicate about $45 million per year in administrative efficiency savings to local governments. The bonding program, which concludes in 1995, raised sufficient funds to begin many of these projects but only provided a small portion of the total dollars required to complete the identified program. As a result of the program, Michigan now has some $1.0 billion of projects ready to proceed to construction but additional funding is necessary to complete construction.

After reassessing total needs and costs on the above projects, MDOT officials have concluded that an additional $410 million of funding per year will be necessary to carry out the priority construction projects and begin to reduce the backlog of deferred maintenance on state trunkline roads.22 (MDOT statements regarding $350 million in need assume that an additional $60 million will be raised from annual bonding.) Other uses of new funds are high speed rail, mass transit and bridge projects. Table 4 summarizes the planned uses of this additional investment, and what the author believes to be true priority needs.

Some of the projects on Table 3 are hard to justify. This is especially true of the high speed rail funding of $25 million per year, and of the additional mass transit funding of $10 million per year. The high speed rail projects between Chicago and Detroit cannot be justified on economic grounds, and is unlikely to draw any private investment. Nor is the federal government likely to come through with the $250 million over 10 years that the overall $1 billion plan assumes. In fact, the U.S. House voted on March 16, 1995 to eliminate $110 million in high speed rail development money, and the Budget Committee has voted to eliminate funding for Amtrak over five years. Finally, even if the project could be justified, it should not benefit from any potential tax increase that is sold to the public on the basis of needy highway improvements. There is already a disproportionately large contribution of state funds to local systems when the ridership of mass transit is compared to highway use. In addition, MDOT is already providing major funding to local systems. For instance, MDOT is currently funding half the operating costs of the SMART system in the Detroit metropolitan area. No additional funds can be justified. After deducting for these projects, the total state system investment need is left at $375 million per year, as shown in Table 4.

The projects listed in Table 4 do not address county and local needs, even though they are the state's "priority" projects. A recent survey of county road commission needs by the Road Information Program found that $8.9 billion in needed improvements are claimed by the counties.23 Figure 7 summarizes the needs by project type. Reconstruction needs account for 45.7% of the total requirements, capacity improvements account for 35.3% of the total, and resurfacing accounts for another 12.4% of the total. The counties indicate in the survey that 90% of their 14,138 miles needing resurfacing are unfunded, and that 97% of the 10,814 miles needing reconstruction are unfunded. The unfunded need represents some 57% of the total county paved road system. The counties also report in the survey that 39% of their bridges are deficient. No information is available on city/village needs. The County Road Association of Michigan has proposed a package of state tax increases to fund an additional $900 million per year in spending.24 This package would raise $305 million for counties using the current allocation formulas.

Are the county claims realistic, and have they been prioritized? First, the $8.9 billion of needs over ten years clearly represents a wish list for the county officials that were surveyed. There has been no effort to rate the importance of these projects, or to prioritize the need. Many of the individual county needs statements also seem suspect. For instance, it is hard to envision how Berrien County can have $420.5 million in needs, when neighboring counties have needs in the range of $20-$50 million, and Wayne County's total needs are stated to be just $410 million. In fact, the County Road Association of Michigan's own proposal for funding, surely an initial negotiating position, limits their request for funding to $305 million per year for counties. Their request would generate an additional $171 million for cities, or a total for local needs of $476 million.

After evaluating the $8.9 billion list of county needs, the author believes that approximately $200 million per year in additional county investment can be justified. This amount would mean that the most important 25% of county needs could be funded, a figure similar to the percentage of total state needs that are being proposed for funding. This estimate is based on the stated needs, general knowledge about road conditions, and overall experience. While $200 million would not begin to add all the roads that counties say are needed, or allow all the roads to be paved, or all the bridges to be brought up to current standards, it would allow the most important projects to go forward over time. Such a spending increase would represent a 34.1% increase over current spending by counties on county roads. There is no information available on city needs. However, if city needs were added in proportion to their spending as a percent of county spending, an additional $81.8 million per year could be required. This would leave a total possible need of $281.8 million per year.