Most Michiganders have never studied the state budget, nor have they compared our road budget to other cold climate states. The vast majority of those same people will (correctly) say the roads are in poor shape and more work needs to be done on them.Most Michiganders think the state has enough money for road construction.
I'd venture to guess the workers are coming from the same companies that already do roadwork across the state, maybe a couple outside-the-state firms, plus MDOT. Not exactly rocket science. An extra $700 million a year in road funding, while sizable, is not exactly transformational or unscalable. We're talking an additional 15% or so in annual road spending versus current levels.Bonds are not the answer. Where are the workers coming from?
My two main issues with Whitmer's proposal are as follows:
- No additional funding for local & county roads (which are BY FAR the roads in the worst condition in this state);
- The amount of total proposed borrowings (I would've been more comfortable with, say, $2 billion over three to four years). However, there is a potential mitgant that could come into play, which I'll discuss toward the end of this post.
Interest rates are dirt cheap - at least for now. Michigan has a AA issuer rating from S&P, which is an excellent grade. The bonds should be able to be issued with no discount.I'll also add, in what world does it make sense, after a decade of responsible debt servicing, to take on MORE debt for the state?
However, $3.5 billion over five years is the equivalent of $350 in additional debt per Michigan resident. That's pretty significant for something that is more of a band-aid than a permanent fix.
Now, I will say this - $700 million a year in additional funding is probably a deal that could've been struck with the legislature. But Gretchen was dead set on $2 billion+ in new funding each & every year in the form of a big gas tax hike.
I understand that bond proceeds of this nature cannot be disbursed to local & county governments. OK, fine. How about the general fund dollars that are currently being spent on roads? If the $700 million/yr. in bond proceeds are spent on state roads, which as a whole are already in better shape than local & county roads, then I think revenue sharing from general fund proceeds to local & county governments needs to be increased considerably. The budget for 2020 is already done, so I guess that topic will have to wait until 2021's budget is legislated.
The fact counties and most cities only have two tools for road funding - handouts from Lansing & property taxes - is ridiculous. Counties should have the ability to raise revenue in other ways for roads, and they should NOT have to be reliant on Lansing for handouts!. All 92 counties in Indiana have income taxes. Ohio has county level sales taxes.
https://www.in.gov/dor/reference/files/dn01.pdf
ConclusIon:
Whitmer's proposal has multiple shortcomings but is better than doing nothing, It appears all $3.5 billion in bonds will not be issued all at once, which is a good thing. This will give the Governor and the Legislature time to negotiate a long-term solution, which ultimately may negate the need to fully issue all $3.5 billion in bonds.
I would've strongly preferred to see Whitmer's bonding proposal complemented with a revamped proposal for a long-term fix, but that element was completely absent from her speech, which disappoints me.
Also, her partisan rhetoric on the topic was disappointing. Evidently, she has forgotten that the State House Leader of her own party also strongly opposed her $0.45 per gallon tax increase proposal!
