State Diversion Issues

Not all of our highway user taxes are going for highway purposes. $176.7 million of state funds are being diverted from highway uses to mass transit and some other non-highway purposes. If $25 million of this is for administration, there is still $151.7 million being spent on non-highway programs. This represents 3.2 cents per gallon worth of gasoline tax, and the state contributions to the Comprehensive Transportation Fund are large enough to represent 43.6% of the amount Michigan contributes to the State Trunkline Fund for state administered highways.

Michigan's mass transit systems and non-highway modes of transportation are being subsidized using $270.6 million in local, state and federal funds per year. In 1993 the Michigan bus systems received $106.9 million in assistance from the state, and $35.6 million from the federal government. Total ridership was just 96.3 million in 1993, or a subsidy of $1.69 per ride.38 The two largest systems in Southeast Michigan are receiving the largest subsidies, totaling $100.3 million in fiscal 1995. In addition, the City of Detroit is spending $32 million per year in subsidies on its DDOT system. SMART, the suburban bus system, is seeking an additional regional or suburban county tax that would raise an additional $18-$24 million per year.39

There is a need for mass transportation of some form in southeast Michigan, but the current centralized and traditional bus systems may not be capable of satisfying that demand economically. The current bus systems were designed for downtown and suburb-to-downtown commutes and are not capable of dealing with today's suburb-to-suburb low density travel patterns. Such travel patterns require highly flexible providers using low volume equipment such as small vans and mini-buses and can best be provided by small community-based public agencies and/or private operators. In such a system, the role of a public agency such as SMART and DDOT may be limited to providing Intelligent Transportation System (ITS)-like communications and technology networks such as dial-a-ride 800 numbers, automated vehicle identification systems, dispatch and other capital intensive functions. The public agency might also provide a limited number of main line bus routes if necessary. SMART and DDOT have the management talent to coordinate such a system and should consider a major role change in the transportation system. Solving the economic problems of mass transit also requires the elimination of regulations restricting private operators.

Some portion of existing public subsidies could still be used to support low income commuters. This could be accomplished through a voucher system that would provide discount coupons through an employer based program. For instance, if half the $132.3 million in DDOT and SMART subsidies were made available to the most needy riders for 50% of all existing rides, this would provide $66.2 million for 32.95 million rides (half of the 1992 total passengers) with a voucher of $2.01 per ride. This would leave $66.2 million which could continue to be used for administration, limited main-line bus services or other purposes. While this savings will not be used to offset the possible size of a necessary gas tax increase, the savings could ultimately be applied to other transportation purposes such as local road needs.