Motorists Still Paying For Engler And Granholm’s Road Debt
Payments on those bonds use transportation tax dollars that would otherwise go to fix today’s roads
News reports suggest that Gov. Gretchen Whitmer may propose having the state taking on more long-term debt as a way to increase funding for road repairs. It wouldn’t be the first time Michigan took that path.
In a February 1997 editorial, the Detroit Free Press criticized then-Gov. John Engler for how he was dealing “with public outrage over the condition of Michigan’s roads. ...”
“But the governor’s wish list for avoiding a tax increase can’t come close to catching us up on the accumulated unmet needs,” the Free Press editorial stated.
One way Engler avoided tax increases was to use long-term state borrowing to pay for short-term fixes. By 1998 the state had already accumulated $378 million of debt in bonds issued to pay for road repairs.
And in September 2018, or 20 years later, the state still owed $34 million from that 1990s road debt, according to the Michigan State Treasurer.
Engler’s successor, Gov. Jennifer Granholm, also used borrowing to pay for roadwork, taking on long-term debt to increase road repair budgets in the short term.
Today’s motorists are not finished paying for the debt incurred by both governors. They are paying it back through a portion of current gas tax revenues as well as a part of their vehicle registration taxes, with the money going to investors (bondholders) rather than road builders. As of 2018, Michigan was still making debt service payments on $1.2 billion it borrowed for road repairs in the 1990s and 2000s.
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.