Road Funding in Michigan

2nd Jul 2015

FINALLY - Michigan Legislature Passes $1.2 Billion Roads Plan

An effort that MITA has been working on for nearly a decade finally came to a conclusion late Tuesday night as the House concurred on a road and bridge plan the Senate had sent over earlier in the day, increasing the investment levels to Michigan’s transportation system by over $1.2 billion once fully implemented. The revenues are generated by a combination of the following: a gas tax increase, registration fee increases and reprioritizing the state’s general fund budget. The measure was passed with nearly all Republican votes and only one Democrat from both the House and Senate voting in favor of the proposal.

The plan will be fully implemented by 2021. There are incremental increases scheduled between now and then. The Michigan Legislature had already previously approved an additional $400 million towards transportation for 2016, and the new plan will increase revenues by $452 million in 2017, $608 million in 2018, $763 million in 2019, $944 million in 2020 and $1.225 billion in 2021. Beginning in 2022, the gas tax will be tied to inflation, thus allowing for ongoing increases in those revenues. These levels are in addition to current investment levels.

The additional revenues come from an increase in the gas tax by 7.3 cents per year beginning on January 1, 2017 and a 20% increase in vehicle registration fees for passenger and commercial vehicles, also beginning on January 1, 2017.

In terms of reprioritizing general fund money, the legislation statutorily dedicated $600 million by 2021 passing through the transportation formula. Unlike a one time appropriation from the general fund, which has happened over the past few years, this money is statutorily dedicated each and every year moving forward, and the legislature does not have to act. Unlike gas tax and registration fees, which are constitutionally dedicated and cannot be changed by future legislatures, this general fund money can be rededicated; however, it is a very tedious process. The general public and future lawmakers will not be quick to take money away from already dedicated dollars to transportation, but it will be something that MITA will monitor in the future.

The timing of increases and the use of general fund dollars became one of the most discussed topics during the debate on road funding. Although MITA would like to see more dollars in the system during the first two years, this proposal is better than what was passed out of the House two weeks ago. MITA staff is already at work with the administration and MDOT to see what opportunities exist for short term bonding, additional general fund dollars that may be available, or other revenue sources to get more money into the 2016 and 2017 construction seasons.

All in all, this is a HUGE victory for the heavy construction industry in Michigan. The entire MITA membership should be proud of the hard work they’ve put in on getting this accomplished. Whether it was talking to lawmakers, writing PAC checks to the MITA PAC, or educating friends and family on the importance of increased funding for our infrastructure, the commitment and dedication each and every company has demonstrated shows how efficient and professional Michigan contractors are, and we’ve all had a hand in reaching this goal.

If you have any questions or concerns, please contact Mike Nystrom, Executive Vice President, at [email protected] or Lance Binoniemi, Vice President of Government Affairs, at [email protected]. They can also be reached at the MITA office by calling 517-347-8336.