Interpreting Proposal 1’s Loss

First, look at current resources

The 80-20 loss on a $2 billion tax hike will guide subsequent road funding proposals; there is no shortage of interpretations (some odder than others) of the message voters intended to send. Some assert that voters will not approve complex proposals and suggest other tax hikes. The new House proposal, on the other hand, indicates that the proper message is to first look within the state government’s current resources to fix the roads.

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And it’s an easier lift than residents might think. The current transportation budget contains $284 million in general taxpayer support in addition to the revenue distributed from state gas taxes and vehicle registration fees. Recently-passed Senate and House budgets contain $159 million in further support. This extra spending shows that there are ways to devote more money to the roads within the budget.

Even though this is a long way off from the $1.2 billion target, it makes a larger difference than you might expect. The state is just not yet ready to fully spend $1.2 billion on road repair. As MDOT director Kirk Steudle observed, it will take a while for the market to respond to the needed road repair. That’s why Proposal 1 phased in road spending and expedited debt payments.

Gradually increasing road funding is doable for legislators, and this is made even easier by the growth in the state economy. Michigan added 408,700 jobs since the end of the recession, a 10.6 percent growth that is the seventh highest in the country. The treasury received $3.7 billion more in state tax revenue than it did in 2011.

Even with growth and the gradual need for road funding, legislators should still look within the state budget. The money state government spends on economic incentive programs would be better used in constructing roads. The state’s university funding does not ensure that taxpayers get the biggest bang for their buck.

The new House plan recognizes this, increasing road funding over time while diverting funding from less-needed areas like the 21st Century Jobs Fund and Film Incentives to the transportation budget. It also begins devoting more tax revenue from the growing economy to needed road funding.

It is also encouraging the see the Senate consider a repeal of prevailing wages, a step towards saving on construction costs in state, local governments and school districts.

People should be coming together around proposals that look within the state budget and the House plan is an excellent starting point. It is the safe interpretation for Proposal 1’s loss. Through the gradual need for increasing road funding, the money that policymakers already found, the growing state economy and the waste in districts, finding a feasible plan to fix the roads within the state’s resources should be an easier lift than increasing taxes.