Michigan has substantial current unfunded highway system investment needs. Based on
the priority lists and overall spending requests, there is a potential need for an
additional $375 million per year in state trunkline system investment, and a potential
need for an additional $281.8 million per year in county and city investment, or a total
of $656.8 million.
How can such a level of increased investment be justified?
First, the list of projects which have been identified on the state system have the
potential to increase tourism and improve manufacturing productivity and competitiveness
by reducing delays, decreasing travel time uncertainty, and reducing repair costs to
vehicles and damage to cargo. The same is true for investment in local roads in the
Southeast Michigan and Greater Grand Rapids area. Beneficial projects include
reconstruction of major Detroit area interstates, the beltway around Grand Rapids,
upgrades to U.S. 23, improvements to U.S. 31 and 131, and additional state and local lane
mileage around Oakland and Macomb counties.
Several factors support an increase in direct investment. Most importantly, the
condition of Michigan roads has deteriorated badly over the last ten years, with a 36%
increase in the number of state system roads rated poor between 1982 and 1993. With over
36.5% of state roads and 32.0% of county roads rated poor, there is a pressing need to
make improvements on these lanes to slow the deterioration of roads from fair to poor.
Major savings in eventual repair costs can be achieved by fixing fair roads before they
reach poor status. Improving the poor roads will also reduce damage to vehicles by more
than $ 1 00.00 per vehicle per year.
Michigan's very low road spending per capita, per mile, and by percentage of personal
income compared to other states suggests that additional investment may be necessary. On
the other hand, the level of Michigan Transportation Fund revenue growth between 1982 and
1992 does not support the popular notion that revenues have not kept pace with at least
unit inflation. While revenue growth has kept up with unit inflation, it has probably not
kept up as well if mandated increases in design inputs are taken into account. These
mandates require more cement, more environmental mitigation, and more safety factors per
mile of road and increased costs over and above the unit inflation rate. Finally, even if
revenue growth kept up with inflation, if the original base levels of revenue were
insufficient there may still be a need for additional investment.
This does not necessarily mean that all or even a part of the additional $656.8 million
of identified investment needs must be funded through fuel tax and/or registration fee
increases. Other sources of funding include reductions to non-highway programs, cost
reductions and other efficiencies at both the state and local level, and the securing of
an increased share of federal transportation dollars collected from state users. These
other "sources" of investment dollars are explored in the following sections.