State Organizational, Collection and Administrative Issues

First, the whole process of administering highway construction and maintenance at both the state and county levels must be re-examined. MDOT has made major progress in controlling its costs in recent years and has plans to further reduce those costs. It has, for instance, cut its number of full-time employees from 4,950 in 1984 to 3,850 in 1994, and has plans to reduce the workforce to 3,525 by 1998.40 MDOT program size per FTE (Full-Time Equivalents) has also been increasing. In 1984 MDOT produced $140,000 of program per FTE. That has increased to $250,000 in 1994, and MDOT plans to improve that ratio to $510,000 by 1998. MDOT's administration costs as a percent of total budget have also fallen from 10.3% in 1984 to 9.6% in 1994, with plans to decrease this level to 7.2% by 1998. However, a somewhat controversial article by a University of North Carolina-Charlotte professor in the October 1994 issue of Governing claims that Michigan ranks fourth highest in the country on a measure of state administrative costs.41 While substantial progress has been made, additional efforts must be made to increase MDOT productivity and control costs related to administration and fees collection.

Because additional improvements in MDOT administrative costs are already factored into MDOT's needs assessment, no savings are assumed available for offset against the administrative costs. However, it is possible to obtain savings in collection costs. MDOT provides large sums of money to both the Secretary of State and Treasury Departments, and there is little control over costs incurred by these agencies.

For instance, MDOT makes some $80 million per year available to the Secretary of State for administration, and $6 million per year to Treasury for collection of fuel taxes, including taxes on trucking companies. However, the Secretary of State, Public Service Commission, and Department of Transportation also collect various fees from trucking companies. Both Treasury and the Secretary of State audit companies and there are numerous other duplications. An effort to institute "one stop shopping" and administration of truck fee collections would save both the state and the trucking industry money. Michigan government, at the urging of the National Association of Governors, has been working on such a program since 1985 but has made little progress while other states such as Iowa and Virginia have completed their programs. With this program and a few other savings MDOT can save at least $3.0 million per year.

Increased legislative oversight and public visibility of MDOT operations might help management to control planning and administrative costs related to excessive regulations and obsolete mandated procedures. Such visibility would help build the case to undo such regulations. For instance, both federal and state environmental and long-term planning regulations are driving up MDOT administrative costs. Increased legislative oversight would help build the case for more careful cost-benefit analysis of environmental and other regulations that drive up the cost of highway construction with little offsetting benefit. Such oversight might also better familiarize legislators with federal highway planning and roadbuilding regulations that drive up costs with little benefit, and increase pressure on the Congress to eliminate these requirements. Currently, because all funding is from restricted funds, there is almost no legislative oversight and public visibility of MDOT administrative costs.