Published in Economic Development

Plan B: In State of the State, Whitmer proposes selling bonds to cover road fix

BY Wednesday, January 29, 2020 08:23pm

Gov. Gretchen Whitmer earned quick approval this morning for the state to sell $3.5 billion in bonds to pay for major road projects in Michigan over the next five years.

The plan that the Michigan Transportation Commission approved in a 6-0 vote, known as Rebuilding Michigan, would finance 49 road projects and accelerate 73 others. The plan would nearly double the amount of funding available for road work over five years “than if we wait,” Whitmer said in her annual State of the State address Wednesday night.

Gov. Gretchen Whitmer

“My Rebuilding Michigan plan is financed without an increase at the gas pump, and it will do three things: save time, save money, and save lives,” she said. “Since it doesn’t require the legislature to act, we can get started right away, and that’s important. Cutting down on the time we take to repair Michigan’s most frequently traveled trunklines and state roads is fiscally responsible.”

The move comes after Whitmer’s proposal last year to increase the state fuel tax by 45 cents a gallon over three years stalled. The plan would have raised $2 billion to $2.5 billion needed to stop the decline of Michigan’s roadways and restore their condition. The earlier proposal proved widely unpopular and was never given serious consideration in the legislature, even among Democratic lawmakers in her own political party.

“Bonding makes sense when the degradation curve shows the cost of putting off rebuilding outweighs the cost of financing and interest,” said former Grand Rapids Mayor George Heartwell, a member of the Transportation Commission. “The fact that the Legislature is still stalling leaves the governor no choice but to employ this tool to rebuild crucial roads and bridges now.”

In her address, Whitmer described Rebuilding Michigan as a “Plan B” after last year’s fuel tax proposal and said it would take advantage of existing low interest rates.

She acknowledged that the funding raised through the bonds still was not enough to restore the state’s deteriorating roads.

“So, from now on, when you see orange barrels on a state road: Slow down, and know that it’s this administration fixing the damn roads,” she said. “But let me be clear: These new projects will only address the worst of our most highly traveled state roads. We still need the legislature to come up with a real, long-term solution to fix the roads. So next time you’re driving down your local street and hit a pothole or see a bridge closed, call up the Republican leaders in the legislature and encourage them to act.”

Whitmer concluded her address with: “It’s time for action. Let’s get to work. Let’s move some dirt.”

The governor’s proposal drew quick support Wednesday night from the trade association representing the construction industry in Michigan.

“We applaud Gov. Whitmer for proposing a solution which would generate immediate revenues to address Michigan’s worsening roads crisis. Without a long-term solution, bonding is the best — and truly only — realistic option on the table,” Mike Nystrom, executive vice president for the Michigan Infrastructure & Transportation Association, said in a statement issued while Whitmer was still delivering her State of the State address.

“Even with the proposed bonding solution, the debate around a significant long-term investment cannot be delayed any longer. We look forward to working with the legislature and getting to work on fixing Michigan’s roads,” Nystrom said.

The Grand Rapids Area Chamber of Commerce neither supported or opposed the governor’s road bond proposal.

A more permanent solution to funding road improvements is still needed, the chamber said in a statement,

“The Grand Rapids Chamber supports a significant, sustainable and meaningful funding increase for Michigan’s transportation infrastructure,” said Joshua Lunger, senior director of government affairs at the Grand Rapids Chamber.

“Bonding is a financing tool that could be beneficial in some contexts but is not a long-term solution,” Lunger said. “Michigan is still paying off debt from road bonds issued more than a decade ago. We urge the Governor and the Legislature to find a plan to fix our roads and bridges that reverses the decline of our freeways and commercial corridors, while supporting local investment and public transit.”

Earlier this week, a bipartisan group of former lawmakers and Lansing political veterans that last summer offered a similar increase in the state fuel tax to fund roads urged lawmakers to find a permanent fix, “but not at the expense of other state spending priorities.”

In a statement, the Michigan Consensus Policy Project urged leaders in Lansing to “move toward a user-based, long-term plan to address the state’s massive infrastructure needs.” The group urged lawmakers to look for new user-based revenue for roads, end the use of general fund money for roads, and “minimize the use of bonding without additional revenue sources.”

Bonds “can be a useful tool to deal with immediate problems, but it ought to be combined with additional revenue to meet long term needs,” the group said in a statement.

“While bonding for road needs may be a good idea to explore, without a dedicated revenue source it will mean additional pressure on the general fund,” said Ken Sikkema, a former Republican Senate Majority Leader from Kent County and chairman of the Michigan Consensus Policy Project. “It’s important that policymakers recognize the need for new revenues to address our road crisis while maintaining funding for public safety, environmental protection, education and other critical state services.”

State Sen. John Bumstead, a Republican from Newaygo and vice chair of the Senate Committee on Appropriations, said Wednesday night that he supports “responsible measures to fund our schools and start making major repairs to our infrastructure.”

“I believe we need to continue looking at existing funding before turning to taxpayers. Like many of my colleagues, I also have reservations about bonding as a solution to fix our roads,” Bumstead said in a statement. “To me, that option just kicks the can further down the road, significantly increases our long-term debt and does nothing to address funding our local roads and infrastructure needs.”

The head of one business group in Lansing, the Michigan office of the National Federation of Independent Businesses, credited the governor with “abandoning her unrealistic fuel tax proposal.” The NFIB’s state chapter plans to check with members to gauge support for the road bonding proposal.

NFIB State Director Charles Owens said the road proposal should avoid any funding for non-road items.

“While small business owners recognize the importance of quality roads, there is well deserved skepticism towards proposals that claim to be for road funding but end up diverting revenue into other projects that have nothing to do with roads,” Owens said.

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EDITOR’S NOTE: This story has been updated to note the Transportation Commission’s approval of $3.5 billion in state bonds to fund road projects, and to add a comment from Commissioner George Heartwell. 

Read 2210 times Last modified on Thursday, 30 January 2020 09:50
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