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Sunday, 25 October 2015 22:00

Michigan Chamber CEO: Inaction on roads could cool business investments in state

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Michigan Chamber of Commerce CEO Rich Studley said state government needs to come to an agreement on roads funding soon or the crumbling infrastructure could act to turn off potential investors and harm the state’s business climate. Michigan Chamber of Commerce CEO Rich Studley said state government needs to come to an agreement on roads funding soon or the crumbling infrastructure could act to turn off potential investors and harm the state’s business climate.

LANSING — As the governor and legislators struggle to agree on a plan to fund upgrades to Michigan’s aging road system, Rich Studley worries that failure to resolve the issue hurts the state’s reputation and business climate.

In time, the CEO of the Michigan Chamber of Commerce believes that bad roads could become more than a nuisance for motorists and act as a disincentive for business investments.

“I think the inability of the governor and legislative leaders, after years and years of debate, (to pass a road plan) is beginning to reflect poorly on our state,” Studley said.

Speaking at a recent conference in Lansing on private equity investing, Studley named road funding as the top public policy issue in the state right now for the Michigan Chamber of Commerce. If the issue goes unresolved much longer, it could begin to affect business investments in Michigan, he said.

The poor condition of Michigan’s roads is an “unnecessary increase on the cost of doing business and the cost of living for employees and Michigan residents” because of excessive wear and tear on cars and trucks, Studley said. Many other nearby states, Ohio and Indiana among them, have addressed road funding.

“Good roads are essential to every one of our leading industries,” said Studley, citing manufacturing, agriculture and tourism. “It’s critically important to our economic development infrastructure and our state’s economic competitiveness. A lot of these private equity investors can invest in companies around the world. They don’t have to invest in Michigan at all.”

Gov. Rick Snyder this month said he had reached an impasse in talks with leaders in the State Legislature on a package for road funding. Lawmakers have been stuck on the mix of tax and fee increases and spending shifts to raise new revenue for roads, although a new proposal emerged last week in the state House.

Gretchen Perkins, a partner at Detroit-based private equity firm Huron Capital Partners who spoke at the Lansing conference that was sponsored by the Association for Corporate Growth, also views the issues as a potential hindrance to attracting investment and to the state’s economic progress.

Perkins considers the issue “extremely important” to businesses in Michigan.

“The efficient movement of goods and services is essential to a business’ bottom line,” she told MiBiz after the conference. “The downtime related to fleet damage or just traffic delays related to poor road conditions is money down the drain. Such conditions absolutely impact a business owner’s decision to locate here or expand here or elsewhere.”

The Michigan Chamber of Commerce favors a “comprehensive $1.2 billion solution that’s probably at the low end of the range because of years of delay in tackling this issue,” Studley said. The package should include gradual increases on fuel taxes and vehicle registration fees, reprioritizing state spending, and reforms that will save costs on road projects such as more competitive bidding and construction warranties.

The present political debate over the issue comes nearly six months after voters resoundingly rejected a ballot proposal that blended higher taxes with issues that were not directly related to road funding.

The results of the May election provided a “clear message” that voters want legislators to resolve the issue on their own, Studley said.

“You can travel to Michigan from other states or foreign countries, land at world-class airports in Grand Rapids or Detroit, and then you’re put on second- and third-rate roads,” he said. “What we need right now is less talk and more action.”

The Michigan Chamber in July voiced support for the Senate version that redirected spending, raised fuel taxes, and included an automatic rollback in the state income tax rate when state spending growth exceeded the rate of inflation.

After the May election on the ballot initiative, the state House and Senate have each passed their own versions of legislative packages to increase funding for roads and redirect state spending. Neither proposal has gained support in the other legislative chamber.

A subsequent $1.2 billion House proposal that passed last week on a narrow vote would steer $600 million from the state’s general fund to roads and generate another $600 million through  higher fuel taxes and registration fees phased in over five years. It would also expand the number of people eligible for the state’s homestead property tax credit and how much they could claim.

Gov. Snyder has indicated he supports redirecting no more than $400 million from the general fund, a position supported by the group Business Leaders for Michigan.

“We have serious concerns about any proposal that relies on using more than $400 million in General Fund revenues,” Business Leaders for Michigan CEO Doug Rothwell said. “Using the General Fund beyond that level isn’t sustainable and puts other critical needs at risk — ranging from potential Medicaid shortfalls and less money for community services to higher tuition bills and weaker efforts to attract jobs. These priorities are just as important as fixing potholes.”

Late last week, a coalition of chambers of commerce from Grand Rapids, Lansing, Holland, Grand Haven, Muskegon and Traverse City voiced support for a plan that uses $600 million in existing state revenue and $600 million in new revenues, mostly from transportation fees, for road funding.

“Our memberships clearly recognize the importance of infrastructure investment,” said Rick Baker, president and CEO of the Grand Rapids Area Chamber of Commerce. “It is time to get this done.”

Read 2877 times Last modified on Monday, 26 October 2015 16:33

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