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Michigan’s Roads Crisis: How Much Will It Cost to Maintain Our Roads and Bridges? 2014 Update

By Rick Olson, former State Representative Reporting analytical work performed by Gil Chesbro and Jim Ashman, with the Michigan Department of Transportation, at my request March 19, 2014

In the September, 2011 original report, we said: “The model projected that almost $1.4 billion dollars more revenue per year would be needed in 2012-2015 and rising to almost $2.6 billion per year by 2023 to achieve the goals set. . . The conclusion reached was that if the investments projected by these models are not done, either the deferred costs of maintaining our roads will be much higher OR we choose to accept lower quality roads. From a business perspective, the set of investments recommended is the lowest long-term costs of maintaining our roads.”

In 2012, the model was updated to reflect the road condition data collected in 2011 and 2012, and the additional revenue needed climbed to $1.542 billion and rising through the years. In 2013, the model was again updated and the number climbed to $1.754 billion and rising through the years. It is important to have a 2014 update with the current discussions about road funding in the Michigan legislature. In the 2012 and 2013 updates, we did not update the construction cost numbers. However, construction costs have increased in the past three years, despite a very competitive bidding environment with contractors hungry for work. In this update, we have run the model with a combination of the change in road condition AND with the construction cost numbers updated to reflect current conditions.

The bad news is that the total in the first year has risen again - to $2.183 billion additional funding needed.

Changes in Road Conditions and Implications Therefrom

The road condition data used in this study is a combination of that data collected in 2012 and 2013, which is more comprehensive than any one year, due to road agencies rating different roads each year. In contrast to past years, we do not see an increase in the percentage of roads rated “poor” and relatively steady percentages of “good” and “fair” roads. It is believed that this has been caused by a very high percentage of road maintenance and/or construction had occurred on the poor roads. This “worst first” approach is contrary to the pavement preservation methods that have been proven to be the best approach financially in the long run. Nonetheless, this is not a criticism of the road agencies, as they have had to respond to safety issues and public demand with very limited dollars.

Despite the apparent steady percentage of road rated good or fair, if those roads have not received preventive maintenance treatments, they have deteriorated somewhat, developing cracks and making them more susceptible to developing potholes. A casual observer this spring will see severe potholes in some roads that just last summer looked in good condition. These

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roads will now be more costly to save than if they had received pavement preservation treatments.

2004-2013 Pavement Condition of Federal Aid Eligible Roads

Source: Chesbro, Transportation Asset Management Council

Paved�NonͲFederalͲAid�Roads2013

Chesbro,�TAMC,�25�Feb�2014

As in previous years, the data regarding the non-federal aid roads show them to be in much worse condition than the more heavily traveled roads eligible for federal aid.

Key Study Assumptions.

We used the same goals that were used in the 2011 study of 95% of the state’s trunkline freeways having a PASER rating of good or fair, and 85% of the remaining paved roads good or fair.

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The construction cost assumptions were updated as follows:

2011 Lane-Mile CostsReconstruction Rehabilitation CPM

Freeway 1,456,000 643,000 66,600Non-Freeway Trunkline 1,250,000 366,000 54,800

Federal Aid Non-Trunkline 562,000 165,000 26,000Non-Ffederal Aid 365,000 105,000 20,000

2013 Lane-Mile CostsReconstruction Rehabilitation CPM

Freeway 1,785,163 666,059 68,988Non-Freeway Trunkline 1,378,930 391,106 58,559

Federal Aid Non-Trunkline 619,967 176,318 27,783Non-Ffederal Aid 402,648 112,203 21,372

The model was run for the roads, but updated projections for bridges has not been received since the 2011 report. To make the totals for both roads and bridges, the 2011 bridge data is used to calculate a road and bridge total.

Study Results.

The table below shows the year by year results of how much additional money is needed to maintain our roads and bridges over the course of 12 years to reach the goals of 95% and 85% good or fair.

2011�Bridge�Results

Road�&�Bridge�Total

Year Needed Current�Budget Shortfall Shortfall Shortfall

2014 $3,230,002,014 $1,097,002,014 $2,133,000,000 $50,000,000 $2,183,000,000

2015 $3,230,002,015 $1,097,002,015 $2,133,000,000 $50,000,000 $2,183,000,000

2016 $3,230,002,016 $1,097,002,016 $2,133,000,000 $50,000,000 $2,183,000,000

2017 $3,230,002,017 $1,097,002,017 $2,133,000,000 $50,000,000 $2,183,000,000

2018 $3,230,002,018 $1,097,002,018 $2,133,000,000 $63,060,000 $2,196,060,000

2019 $3,230,002,019 $1,097,002,019 $2,133,000,000 $78,600,000 $2,211,600,000

2020 $3,531,502,020 $1,097,002,020 $2,434,500,000 $94,000,000 $2,528,500,000

2021 $3,638,077,021 $1,097,002,021 $2,541,075,000 $110,030,000 $2,651,105,000

2022 $3,749,980,772 $1,097,002,022 $2,652,978,750 $127,080,000 $2,780,058,750

2023 $3,867,479,711 $1,097,002,023 $2,770,477,688 $144,890,000 $2,915,367,688

2024 $3,990,853,596 $1,097,002,024 $2,893,851,572 $163,110,000 $3,056,961,572

2025 $4,120,396,175 $1,097,002,025 $3,023,394,150 $183,220,000 $3,206,614,150

2014�Road�Study�Results

Note the amount needed rises over the years. Note that the first five years’ totals exceed $2 billion and goes up to over $3 billion by the end of the 12 year period. The amount for the roads stays flat over the first six years because the model has a built in assumption that construction costs are constant to 2019, then rises at a rate of 5% per year thereafter. Therefore, any revenue source added should have the capability of growing, otherwise the state will be in a similar position within just a few years as inflation eats up the increased revenue.

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The results were also looked at as averages over the 12 year period to calculate the proportions of the additional money would be needed for the various categories of roads, as shown here.

Goal Funds Needed

Current Budget

Shortfall

Paved Lane Miles

Freeway 10,024 95% $706 $148 $558

NonFreeway Trunkline 19,432 85% $794 $317 $477

NonTrunkline Federal Aid 54,396 85% $1,300 $378 $922

Non-Federal Aid 79,482 85% $723 $254 $469

Road Subtotal 163,334 86% $3,523 $1,097 $2,426

BridgesFreeway 3,260 95% $208 $148 $60

Non-Freeway Trunkline 1,209 85% $43 $37 $6Non-Trunkline Bridges 6,446 84% $75 $44 $31

Bridge Subtotal 10,915 87% $326 $229 $97

Grand Total $3,849 $1,326 $2,523

Funds Needed to Achieve Condition Goals for 2014-2025

(Percentage in Good/Fair Condition)

. . Annual Average in Millions . . .

Year Year

Total Additional Funding Above

Current Investment Needed to Meet and Sustain Goals Year

Total Additional Funding Above

Current Investment Needed to Meet and Sustain Goals

Increase in

Shortfall Year

Total Additional Funding Above

Current Investment Needed to Meet and Sustain Goals

Increase in

Shortfall Year

Total Additional Funding Above

Current Investment Needed to Meet and Sustain Goals

Increase in

Shortfall

1 2012 $1,377 2013 $1,542 $165 2014 $1,754 $212 2014 $2,183 $4292 2013 $1,362 2014 $1,546 $184 2015 $1,745 $199 2015 $2,183 $4383 2014 $1,366 2015 $1,542 $176 2016 $1,822 $280 2016 $2,183 $3614 2015 $1,362 2016 $1,623 $261 2017 $1,906 $283 2017 $2,183 $2775 2016 $1,508 2017 $1,854 $346 2018 $2,087 $233 2018 $2,196 $1096 2017 $1,733 2018 $2,004 $271 2019 $2,221 $217 2019 $2,212 ($10)7 2018 $1,877 2019 $2,152 $275 2020 $2,399 $247 2020 $2,528 $1308 2019 $2,019 2020 $2,318 $299 2021 $2,585 $267 2021 $2,651 $669 2020 $2,178 2021 $2,379 $201 2022 $2,780 $401 2022 $2,780 ($0)10 2021 $2,232 2022 $2,536 $304 2023 $2,986 $450 2023 $2,915 ($70)11 2022 $2,382 2023 $2,731 $349 2024 $3,201 $470 2024 $3,057 ($144)12 2023 $2,569 2024 $2,924 $355 2025 $3,428 $504 2025 $3,207 ($221)

2025 $3,13412 Year Total $21,964.72 Total $25,151 $3,186 $28,912 $3,761 $30,279 $1,367

Less 2012 Increase Avoided by Delay $1,377 Increase in Cost Due to Delay in Legislative Action $1,809

Less 2013 Increase Avoided by Delay $1,542

12 Year Increase in Cost Due to Delay in Legislative Action $2,219

Less 2014 Increase Avoided by Delay $1,754

12 Year Increase in Cost Due to Delay in Legislative Action ($387)

All Roads & Bridges ($ in millions)

2011 Study Results 2012 Study Results 2013�Study�Results 2014�Study�Results

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The total 12 year cost rose from $21.965 billion in the 2011 study, to $25,151 billion in the 2012 study, to $28,912 in the 2013 study, to this year’s study 12 year total of $30,279. Whereas we calculated the cost of delay, year by year to be $1.809 billion from 2011 to 2012 due to legislative inaction, and $2.219 billion from 2012-2013, curiously the net cost of legislative inaction from 2013 to 2014 is a negative $387 million. I suspect, however, this “savings” is illusory, with the deterioration of the roads that the PASER rating system does not pick up, with it being a visual rating, while in fact the aging roadway may be becoming more susceptible to damage such as we are seeing this winter and spring.

Projected Road Quality with Proposed Additional Funding.

This graph shows the percentages of the freeway miles that are good or fair, and what would be poor, assuming the additional funding shown above was available. Even with the additional funding, initially we would not see an instantaneous average improvement, as even the additional money will only go so far, and there is a limit on the percentage of the highways that may be worked on in one year without severely adversely causing traffic congestion. Nonetheless, by the 9th year the goal of 95% good or fair is achieved.

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For the non-freeway federal aid road that are still in the “trunkline” category, we would actually see a reduction in the percentage of the roads rated good or fair for a couple of years before construction could catch up with the deterioration rate. Nonetheless, by the 12 year, the goal of 85% good or fair is achieved.

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For the non-trunkline federal aid roads, we would see significant improvement pretty quickly from their current low 60% good or fair ratings, and the 85% good or fair goal would be reached in the 12 year.

For the non-federal aid roads, here too we would see rather dramatic improvement from the low below 60% good or fair ratings, and the goal of 85% good or fair would be reached in the 12th year.

Is $2.183 Billion All We Would Need to Increase Transportation Revenue to Solve the Transportation Funding Problem?

The $2.183 billion calculated with the model is just the additional amount needed to maintain our existing pavements and bridges, and does not consider additional funding for relieving congestion, addressing safety issues, increased attention to our gravel roads, meeting deferred state and local road agency equipment needs, or providing increased funding for transit, rail, air or water transportation. If we consider just the current 10% of the Michigan Transportation Fund going to transit, the $2.183 billion would need to be increased by 10/9 = 1.11, or $2.426 billion. (The 10% is after “carveouts” for the recreation fund, administration and collection, rail grade crossings, critical bridge debt service, and about $200 million of other allocations of funds.)

Does the Current Brutal Winter Affect This Analysis?

This winter with the extended periods of below freezing temperatures has the potential to significantly affect this analysis. The deep frost has and is causing heaving, and when the frost comes out and the surface sags, the pothole problems will likely multiply from the already severe breakup on many of our roads. The lack of the desired preventive maintenance in many of the

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roads has left them vulnerable to water penetration, which is the roads’ greatest enemy. When the road rating data is collected this summer, we expect the resulting road condition data reported next winter by the Transportation Asset Management Council will look far worse. When this data is plugged into the model next year, this year’s study results will likely look very optimistic.

Is There a Less Expensive Way to Reach Our Goals of Good or Fair Roads?

Incorporated in the original study and each subsequent update is the concept of “asset management”, i.e., a pavement preservation program employing a network level, long-term strategy that enhances pavement performance by using an integrated, cost-effective set of practices that extend pavement life, improve safety and meet motorist expectations. The program adopts the idea of the right fix (from the “mix of fixes”) at the right place at the right time to optimize pavement life. The asset management concept emphasizes that it is less expensive to maintain good pavements over the long-term than allow the pavements to deteriorate to the point of requiring more expensive “fixes”, including reconstruction. In practice this would not be able to be done perfectly, so this study’s projections are the “best case” scenario.

As concluded in the 2011 study, “Bottom line: if the investments projected by these models are not done, either the deferred costs of maintaining our roads will be much higher OR we choose to accept lower quality roads. From a business perspective, the set of investments recommended is the lowest long-term costs of maintaining our roads.”

Do We Really Need to Have 95% or 85% In Such Good Condition?

It is important to note that even when we approach, hit and maintain the 95% good or fair condition, all the roads will not look in “like-new” condition.

Percentage�of�"Good"�and�"Fair"�When�95%�or�85%�Goals�Are�Reached

Good Fair Total�GoalFreeway 50 45 95

NonͲfreeway�Trunkline 38 47 85

NonͲTrunkline�Federal�Aid 61 24 85

NonͲfederal�Aid 50 35 85

The table above shows that for the freeways, only 50% will be in the 8-10 “good” rating, 45% in the 5-7 “fair” rating and the remaining 5% in the 1-4 “poor” condition. For the remaining paved roads, the “good” roads range from 38% to 61%. (The non-trunkline percentage of “good” reflects the large amount of reconstruction needed due to their being so deteriorated that reconstruction is needed, while some of the other categories qualify for less costly fixes to keep them out of the “poor” ratings. Failure to apply the lower cost 3, 5 or 7 year “right” fix in past years is coming back to haunt us.) Some of the capital preventive maintenance, such as crack filling, will not be as aesthetically pleasing as fresh, smooth asphalt, but will be much more cost effective. As the photos taken from pages 18-21 of the PASER (Pavement Surface Evaluation and Rating Manual – Asphalt Roads) attached show, “fair” is not “good”. http://epdfiles.engr.wisc.edu/pdf_web_files/tic/manuals/Asphalt-PASER_02.pdf

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What If We Just Maintain Our Current Poor Quality? What Would That Cost?

The House Transportation Committee Work Group in 2011 set the 95%/85% goals and then sought to see what the lowest cost combination of “fixes” and timing of “fixes” was to derive the additional funding needed. A follow up question was asked by a legislator, “What would it take to just maintain the road conditions with no average road system improvement?” The funding model was again used and the following table was the result (i.e., we would still need over $1 billion more per year, and rising)

Year�

Total�Funds�Needed�to�

Maintain�Roads�in�2011�

Condition�

Total�Additional�Funding�Above�

Current�Investment�Needed�to�

Maintain�2011�Condition�

(millions)� (millions)�2013� $2,796.95�� $1,104.53�2014� $2,796.42�� $1,104.00�2015� $2,700.99�� $1,008.57�2016� $2,276.56�� $584.09�2017� $2,567.96�� $875.14�2018� $2,734.69�� $1,042.25�2019� $2,916.46�� $1,224.16�2020� $3,062.21�� $1,369.87�2021� $3,035.90�� $1,342.37�2022� $3,012.37�� $1,320.52�2023� $3,122.45�� $1,429.25�2024� $3,315.41�� $1,623.00�2025� $3,485.79�� $1,793.37�

Total� $37,824.16�� $15,821.15�Avg� $2,909.55�� $1,217.01�

The “takeaway” from this finding could well be that if political capital is to be expended, it would be advisable to actually fix the problem, rather than angering some taxpayers by raising taxes and still having them mad because the roads were not getting better, but merely maintained in a poor condition.

Rating pavement surface condition18

RATING 7

GOOD — Routine sealing recommended

Roads show first signs of aging, and they may have very slight raveling. Any longitudinal cracks are along paving joint. Transverse cracks may beapproximately 10‘ or more apart. Allcracks are 1⁄4” or less, with little or nocrack erosion. Few if any patches, all in very good condition. Maintain a cracksealing program.

Tight and sealedtransverse and

longitudinal cracks.

Transverse cracksabout 10’ or more

apart. Maintain crack sealing program.

Tight and sealedtransverse and

longitudinal cracks.Maintain crack

sealing program.

▼▼

▼

Rating pavement surface condition 19

RATING 6

GOOD —Consider preservative treatment

Roads are in sound structural conditionbut show definite signs of aging. Seal-coating could extend their useful life.There may be slight surface raveling.Transverse cracks can be frequent, less than 10‘ apart. Cracks may be1⁄ 4–1⁄ 2”and sealed or open. Pavement isgenerally sound adjacent to cracks. Firstsigns of block cracking may be evident.May have slight or moderate bleeding orpolishing. Patches are in good condition.

Slight surface ravelingwith tight cracks, lessthan 10’ apart.

Large blocks, early signs ofraveling and block cracking.

Open crack, 1⁄ 2“wide; adjoiningpavement sound. Moderate flushing.

Transverse crackingless than 10’ apart;cracks well-sealed.

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Rating pavement surface condition20

RATING 5

FAIR — Preservative maintenance treatment required

Roads are still in good structuralcondition but clearly need sealcoatingor overlay. They may have moderateto severe surface raveling with signifi-cant loss of aggregate. First signs oflongitudinal cracks near the edge.First signs of raveling along cracks.Block cracking up to 50% of surface.Extensive to severe flushing orpolishing. Any patches or edgewedges are in good condition.

Moderate to severe raveling in

wheel paths.

Severe flushing.

▼ Block cracking with open cracks.

Wedges and patches extensivebut in good condition.

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Rating pavement surface condition 21

RATING 4

FAIR — Structural improvement required

Roads show first signs of needingstrengthening by overlay. They havevery severe surface raveling whichshould no longer be sealed. Firstlongitudinal cracking in wheel path.Many transverse cracks and some may be raveling slightly. Over 50% ofthe surface may have block cracking.Patches are in fair condition. They may have rutting less than 1⁄ 2” deepor slight distortion.

Extensive block cracking.Blocks tight and sound.

Slight rutting in wheel path.

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Severe raveling with extreme loss of aggregate.

Longitudinal cracking;early load-relateddistress in wheel path.Strengthening needed.

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▼ Slight rutting; patch in good condition.

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Load cracking and slightrutting in wheel path.▼