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Friday, 06 July 2012 15:23

Michigan Chamber pushes $1.4B plan for roads

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Michigan Chamber pushes $1.4B plan for roads Courtesy photo
MICHIGAN — There's a difference between spending and investing, Rick Studley insists.

So in urging legislators to generate and spend up to $1.4 billion a year to fix state roads and highways, the Michigan Chamber of Commerce will focus on the potential return on investment and the economic benefits from the thousands of jobs it could create.

"Good roads drive jobs," said Studley, CEO of the Michigan Chamber of Commerce that commissioned an economic analysis of ideas considered in Lansing to pay for much-needed road improvements. "It's one of the best jobs programs we could possibly have."

The analysis by the Anderson Economic Group concluded that higher wholesale fuel taxes and vehicle registration fees, or a combination of both, would generate the funding needed to repair Michigan's roads and highways and in the process generate the direct and indirect creation of more than 11,000 jobs.

While the Michigan Chamber of Commerce generally looks down on any form of tax increase or increased spending in Lansing, the condition of Michigan's roads, highways and bridges, plus the potential economic benefits, means legislators need to act, Studley said.

"We believe we have to substantially improve our state's transportation infrastructure if we are going to continue to reinvent Michigan and move our state forward and create as many jobs as possible," he said. "There's a tremendous economic benefit to spending that $1.4 billion carefully and wisely."

Less than 70 percent of Michigan roads are now rated in "good" or "fair" condition. The Michigan Department of Transportation projects that more than half of freeways and 60 percent of other paved roads will fall into "poor" condition by 2015 under the present funding scenario.

A legislative work group in 2010 estimated that under the present system, only about 35 percent of roads would rate as "good" or "fair" by 2023.

In a special message to legislators last October, Gov. Rick Snyder proposed changes to raise $1 billion to $1.4 billion annually for transportation. He recommended eliminating the 19-cent per-gallon tax on gas and the 15-cent diesel tax paid by consumers and replacing them with a percentage wholesale tax to create "a more viable long-term funding approach to maintaining roads and bridges."

Gov. Snyder also proposed raising vehicle registration fees by $10 per month, per vehicle to generate $1 billion annually and allowing for the creation of a voter-approved $40 annual local fee to generate $300 million annually for local road projects.

In his message, Gov. Snyder noted that registration fees have not changed in 15 years "and as a result, Michigan's transportation network is not sustainable," he said.

"Underfunding roads and bridges creates a vicious cycle. Insufficient funding means not enough repairs can be made when they are needed. Without constant repairs, damage to private vehicles increases, personal safety is threatened, and the long-term cost of maintaining the network increases," Snyder said. "It would be easy to put this off, but it would not be the responsible thing for those who believe in a prosperous future for Michigan."

The Anderson Economic Group's analysis that concluded 11,000-plus net jobs would come from an increase in road projects considers a resulting reduction in spending by consumers because of the higher fuel taxes and registration fees, analyst Alex Rosaen said.

The net job estimate includes direct jobs from increased employment on road projects, plus the resulting spin-off jobs as those wages are spent in the economy, Rosaen said. The analysis did not seek to estimate the potential economic benefit from having a better road system across the state, he said.

"Those effects are real, but they are very complicated to figure out," he said. "It stands to reason those effects are there."

Legislation introduced in January to alter fuel taxes and raise registration fees has sat idle.

House and Senate bills would convert gas and diesel taxes to the wholesale level and increase them to 28.3 cents per gallon, generating an estimated $541 million annually for the state's transportation funds. A bill in the House would raise vehicle registration fees by 67 percent, according to a County Road Association of Michigan estimate, and raise $500 million annually.

The job now for organizations such as the Michigan Chamber is to convince lawmakers to act, especially the majority Republicans who generally oppose tax increases at any time, much less during an election year.

The problem with the state's roads is urgent and isn't fixable with "wishful thinking and fairy dust," Studley said.

"This is one that isn't going away," he said. "Sooner or later, you have to spend real money if you want a long-term solution to this problem."

 

Read 1526 times Last modified on Sunday, 29 July 2012 22:24

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