Road Funding

Time FoR a Change

A speciAl report by the mAckinAc center for public policy

John C. Taylor, Ph.D.

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Road Funding: Time for a Change

By John C. Taylor, Ph.D.

Associate Professor of Marketing and Logistics, Grand Valley State University Senior Policy Analyst, Mackinac Center for Public Policy

Table of Contents Executive Summary...................................................................................... 1

How to Use This Report ..........................................................................................1 Overview of Michigan’s Road Conditions and Funding Trends .............................1 Additional Revenues Must Be Linked to Offsets and Reforms...............................3 Lane Expansion and Federal Funds .........................................................................4 Policy Reform Recommendations ...........................................................................4

Introduction................................................................................................... 7 Michigan’s Transportation System............................................................. 8

Road Ownership, Classification and Travel Volumes.............................................9 Michigan Transportation Funding .........................................................................11

Disposition of State and Local Transportation Revenues....................... 14

Disposition of Federal Transportation Revenues...................................................14 Disposition of State Transportation Revenues.......................................................15 State Expenditures by Type/Function....................................................................18 Local Expenditures by Type/Function...................................................................18

Federal, Michigan and Local Revenue Sources....................................... 19

Federal Sources......................................................................................................19 State Sources..........................................................................................................21

Fuel Taxes..................................................................................................22 Registration Fees .......................................................................................25

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Bond Proceeds ...........................................................................................26 Total ...........................................................................................................27

Local Sources.........................................................................................................28 Truck Taxation and Road Costs ............................................................... 29

Truck Taxes and Revenue......................................................................................29 Truck Cost: Revenue Equity Studies .....................................................................30 Michigan’s Extra Heavy Trucks ............................................................................31 Summary ................................................................................................................32

Major Needs ................................................................................................ 32

Federal Funding Trends .........................................................................................32 National Highway Funding Needs.........................................................................33 State Investment Needs Studies .............................................................................34

MDOT ........................................................................................................35 Michigan Chamber of Commerce..............................................................37 Southeast Michigan Council of Governments............................................37 County Road Association of Michigan and the Road Commission for Oakland County ........................................38 Outside Organizations ...............................................................................38

Analysis of Michigan Needs Indicators.................................................................38 Vehicle Miles Traveled Versus Lane Miles Added ....................................39 Commercial Vehicle Miles Traveled versus Lane/Miles Added ................40 Pavement Condition...................................................................................42 Congestion Levels ......................................................................................45 Car Damage Costs.....................................................................................47 State Trunk Line Funding and Spending Trends .......................................47 Major Project Funding Needs ...................................................................49 Highway Inflation Impact on Revenue.......................................................49 Debt Service as a Percent of Spending ......................................................50 County/City Funding Pressure ..................................................................51

Conclusions on Need .............................................................................................52 Economic Growth Benefits of Transportation Infrastructure Investment.......................................................................... 52

The Broad Rationale for Transportation Infrastructure Investment ......................53 National Transportation Investment and Economic Growth .................................55 National Case Studies on Highway Infrastructure Investment Benefits................56 Michigan Transportation Investment and Economic Growth................................57

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Michigan Transportation Investment: Contributions to the Economy and Individuals .....................................................59

Policy Recommendations ........................................................................... 60

Offsets to Increased Transportation Taxes ............................................................61 Transportation Funding Proposal...........................................................................62 Transportation Spending Proposal.........................................................................64 Spending Program Details .....................................................................................64

Regular Formula Allocation Fund.............................................................65 Priority Network Fund...............................................................................66 Incentive Match Fund ................................................................................67

Additional Public/Private Funding Options...........................................................69 Reform Recommendations.....................................................................................71

Consolidation of Local Units and Pooled Services ...................................71 State Trunk Line Road Maintenance..........................................................72 Prevailing Wage Laws ...............................................................................73 Design and Build with Warranty ...............................................................73 Scorecard ...................................................................................................74 Performance Audit .....................................................................................75 Control Over Environmental Impact and Project Planning Studies .........75 Mass Transit Funding................................................................................76

Other Recommendations........................................................................................77 About the Author ........................................................................................ 79

References.................................................................................................... 80

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