News Story

House Road Plan Leaves Plenty of Money for Pure Michigan Campaign

Threats that plan to fix roads jeopardizes state's tourism campaign is a red herring

Misinformation is fueling the loudest complaints against the current House Republican road funding plan. Credited largely to House Speaker Kevin Cotter, R-Mt. Pleasant, the plan would earmark specified amounts of future state income tax revenue to roads, thereby avoiding major tax hikes. Income tax revenue is projected to grow by a larger amount than road repair earmarks, meaning there would still be more money available for other spending.

But the plan would nevertheless take hundreds of millions of increased income tax dollars off the table that would otherwise be available for additional non-road spending, which places it squarely in the rhetorical crosshairs of the Lansing establishment's government-centric culture.

In addition to the income tax earmarks, the plan is also attracting Lansing opposition due to a provision that would transfer $187 million from corporate welfare programs to road repairs. On the day the plan was announced in mid-May, Steve Arwood, head of the Michigan Economic Development Corporation (the state's corporate welfare arm) began sounding a particular false alarm.

Arwood claimed the proposal would put in jeopardy the popular Pure Michigan advertising campaign, which is overseen by the MEDC. That claim is unwarranted. The MEDC budget is $400 million annually, which means that even if $187 million of it were shifted to roads, there would still be $215 million available to fund the Pure Michigan program, which currently spends $29 million. In other words, the only threat to Pure Michigan funding would be if the MEDC itself - which has 52 employees with salaries in excess of $100,000 - decided not to fund it.

Prominent opponents of the House plan, including ones who have consistently pursued a large tax hike for road funding, have echoed the groundless concerns about Pure Michigan. More than likely the ruse was employed because Pure Michigan is the most visible and possibly most popular MEDC program. The fact that the House road plan clearly would not endanger its funding was apparently deemed irrelevant.

Elements of the regular news media also picked up the theme, apparently without bothering to look at the actual budgetary details. Seemingly, much of the media has judged that a little thing like examining the basic math involved should not get in the way of their story.

On Thursday, Michigan Capitol Confidential asked Cotter if he would consider placing language in the bills specifically authorizing continued funding for Pure Michigan, so as to quiet the accusations.

“Yes, actually we did that yesterday in committee with a series of amendments that make it clear our intent is that Pure Michigan be funded,” Cotter said. “Not only that, but we backed it up with budget language that would actually slightly increase funding for Pure Michigan.”

“Under our plan, MEDC would have to do some belt tightening,” Cotter continued. “Our position is that maintaining the roads should be considered a vital part of economic development. However, the way this has played out, because Pure Michigan is popular, there has been an effort to promote an inaccurate perception that Pure Michigan is somehow threatened by the plan. We need to make it very clear that that is not so.”

Michigan Capitol Confidential asked Cotter what he thought the chances are that the House Republican plan, or major portions of it, would be enacted.

“It’s hard to say,” Cotter said. “Our purpose is not to just to see it pass so that we can get credit for moving it. We believe in this plan. But this issue will not ultimately be determined by us alone. I think we’ll be seeing the Senate’s plan pretty soon.”

“I wouldn’t say that I expect everything in our plan to be in the final legislation,” Cotter continued. “I am truly committed to getting this issue resolved and I believe our plan is a real good start.”

Cotter added that — in addition to the false claims that Pure Michigan would be threatened by the House road funding plan — there has been another misconception that concerns him.

“Our plan specifically puts General Fund dollars into roads,” Cotter said. “If anyone would take the time to actually read the bills, they’d see that what it does is basically restrict a certain amount of those funds for roads. That means the plan does not depend on future revenue increases; the roads get the money whether or not the economy continues to grow.”

“There has been a perception that the plan is dependent on expected revenue growth and that perception has tended to make it seem like the plan isn’t solid,” Cotter said. “That’s not the case. With this plan our approach has been to do what families do, which is make sure priorities are taken care of. This road funding plan funds roads whether economic growth continues to occur or not, and it’s important that that be understood.”

The Mackinac Center has consistently advocated for getting rid of all corporate welfare. This position is based both on principle and mountains of evidence that MEDC programs, including Pure Michigan, are costly, grossly ineffective, invite cronyism and defy accepted expectations of public transparency.

However, a pressing issue of the moment is whether the House road funding plan is to be judged for what it actually is or continue to be maligned and attacked based on unfounded and inaccurate pretexts. The record needs to be set straight. Then let the chips fall where they may.


House Road Plan Relies on Reality

Michigan House Republicans Find $1 Billion More for Roads with No Big Tax Hike

Critics of Growth Projections in House Road Plan Should be Unnerved by Pension Underfunding

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.