News Story

How Michigan Can Fix The Roads Without Tax Hikes

Redirect revenue growth and corporate subsidies to roads, eliminate optional grants and more

Gov. Gretchen Whitmer has proposed increasing the state gas tax by 45 cents per gallon because, she said, there is not enough money in the current budget to fix the roads. “There are not many parts of our current tax code where you can make adjustments and raise that kind of revenue,” Whitmer said at a recent roundtable hosted by MLive news.

But fiscal policy analysts at the Mackinac Center for Public Policy disagree. They are working on a road funding solution that relies on projected growth in state revenue and shifting some priorities in the budget. The result, they say, will provide more money for road repairs than the governor’s tax increase can yield.

The Mackinac Center’s list of recommendations is a work in progress, according to fiscal analyst Michael LaFaive. It could produce an extra $2.2 billion for road repairs with no tax increase, he said, which is more than the additional $1.9 billion Whitmer wants to spend next year. LaFaive then described some of the proposals on the list.

The largest piece is redirecting to road repairs the $1.2 billion increase in state tax revenue that budget officials estimate will be collected next year thanks to a growing economy — with no tax hike required.

Other reforms and spending reductions the Mackinac Center has identified include:

+ Defund corporate welfare in Michigan. Every year, the state spends hundreds of millions on a wide array of programs that transfer taxpayer dollars to a relatively small number of corporations and developers. Just one example is $75 million appropriated each year to the 21st Century Jobs Fund, a program that gives the money to or spends it on a variety of special interests. Total savings: $244.1 million.

+ Redirect money from the Transportation Economic Development Fund to repairs of highways known as trunk line roads. This fund is another program that selectively benefits a handful of private interests. One example was $500,000 spent in 2017 on redeveloping a 535-acre industrial complex in Willow Run so it could be turned into a self-driving vehicle research hub. That money – and more – could have been spent on fixing the state’s highways. Total savings: $43.3 million.

+ Eliminate state arts grants. Among the recent grants was one for a garden poetry reading at a specialty farm in Ann Arbor. Total savings: $9.0 million.

+ Eliminate taxpayer support for the University of Michigan’s Ann Arbor campus. U-M would be a going concern without state taxpayer dollars. It also had a $10.8 billion dollar endowment as of 2017, the eighth-largest in the country, according to U.S. News & World Report. Total savings: $320.8 million.

+ Reduce funding for a government preschool program called the Great Start Readiness Program. Initially meant for children of low-income families, Great Start has been expanded to subsidize preschool for households with higher incomes. Spending on it has more than doubled since 2011, after adjusting for inflation. Reverting the line item to the 2011 level and redirecting the program to its original purpose would save $131.7 million. Total savings: $131.7 million.

+ End so-called enhancement grant spending, which is often added during midnight budget negotiations. An example is that in the last two budgets, $2 million was granted to the Grand Rapids Civic Theatre. The money was appropriated without public discussion, using a process that identifies the beneficiary only indirectly. Total savings: $115.5 million.

+ End extra school district retirement payments. School districts are responsible for paying the cost of state pensions earned by their employees. To relieve districts of some of that burden, the Snyder administration shifted part of its cost to the state. Some of this responsibility and expense can be passed back to school districts. Total savings: $100 million.

+ Eliminate state funding for AgBioResearch, a program at Michigan State University. The appropriation for it finances research that often benefits the agribusiness industry, which should pay its own way, and some of the spending is of questionable value. For example, MSU announced that its researchers had discovered the “evolutionary origins of the cultivated strawberry.” Total savings: $34.6 million.