Will Michigan be able to fund its highway projects after COVID? - Paycheck

Will Michigan be able to fund its highway projects after COVID?

Paycheckology's FAST Facts

  • Much needed tax revenue greatly reduced: Fuel, registration, and sales tax all down due to COVID-19 lockdowns
  • Construction continues despite less funding: projects planned and underway for the 2020 construction season largely unaffected but 2021 and beyond is questionable
  • What about country roads? Major highways and federal byways guaranteed to be repaired because of $3.5B loan while local roads crumble

Before the age of pandemic and public strife (which seems like a long time ago, but was really only a few months), one of Michigan’s most contentious political disputes was how to go about rebuilding the state’s decaying road and bridge infrastructure.

Gov. Gretchen Whitmer was elected in 2018 in large part on her vow to “fix the damn roads.”

Well the roads still need fixing. But neither Democrat Whitmer nor majority Republicans in the Legislature have had much to say in recent months about what they plan to do about it. And the problem - the gap between re-building needs and money available to address them - has only gotten worse as state and federal revenues dedicated to road and bridge construction has plummeted during the coronavirus pandemic and accompanying government-ordered shutdowns of the economy.

It’s impossible to say currently how much worse.

Like tax collections across the board and across the country, Michigan’s primary sources of state revenue for road repair - fuel, registration and vehicle sale levies - plummeted after the mid-March COVID-19 shutdown. The Michigan Department of Treasury forecasts an 8.5% decline in transportation revenue for fiscal year 2020 (ending Oct. 1), said Michigan Department of Transportation spokesman Jeff Cranson. Federal fuel tax collections have suffered a similar impact.

It is a quandary widely ​shared​ around the country.

Yet Michigan projects planned and underway for the 2020 construction season remain largely unaffected.

Cranson said, “There are not plans to reduce any projects already under contract. It is possible that projects not under contract, and some scheduled for bid in 2021, could be altered.”

So Michiganders can look forward to a summer of lingering pandemic fears, conflict in the streets over police misconduct and race relations, along with roadways clogged by a lot of orange barrels.

Lance Binoniemi, vice president of government affairs for the Michigan Infrastructure and Transportation Association, said the economic impact of the coronavirus has “certainly taken the wind out of our sails” after policy makers and the public had reached a general consensus that road building had to be one of the state’s top priorities.

“But it is still very much on the minds of the people. It’s still a top issue.”

Whitmer, whose 2019 bid to triple the state’s fuel tax for road repair fell flat, has since recalibrated and turned to borrowing $3.5 billion over five years for fixes to the state’s major state and federal highways.

That, however, doesn’t help local, heavily traveled streets, which are among Michigan’s worst.

Unfortunately, said Binoniemi, there is unlikely to be much public appetite for raising taxes for road repairs “when so many people are struggling financially” because of the virus.

Meanwhile, federal fuel tax revenues are in sharp decline and were already ​insufficient​ to cover the amount of money Congress sends to the states to supplement road construction.

So, lots of construction this summer. Less money to pay for it. And maybe a lot less of both in 2021. Uncertainty. Kind of the new normal.

Dawson Bell

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