News Story

No Debt, No Tax Hike: Michigan Can Add $897 Million To Road Budget Right Now

Legislators and governor just have to say ‘yes’

Michigan’s Republican Legislature and Democratic governor came to an impasse on finding more money for road repairs in 2019. Among other things, this means fewer state dollars will be spent on transportation in the current fiscal year than in the previous one.

But the stalemate did not prevent a growing number of tax dollars from continuing to roll into the Michigan Treasury this year. Projections from the Senate Fiscal Agency indicate that when the state closes the books on the current year (2019-20) on Sept. 30, they will show an unspent balance of $897 million.

No law prohibits lawmakers from approving a bill right now to appropriate that money for road repair projects that could begin as soon as contracts are signed with roadbuilders.

Chris Douglas, chair of the economics department at the University of Michigan-Flint, says this means more could be spent on roads without tax increases or spending cuts. “The question is whether the state can expect to have an additional $900 million each year or if it is just a one-time thing.”

Senate Fiscal Agency Director Christopher Harkins added a caution. “It is important to note that future changes to fiscal year 2019-20 expenditures or downward revisions of revenue projections could significantly alter the year-end balance projections,” he said.

But while future revenue may be uncertain, Douglas said that “an additional $900 million even for one year would be helpful for roads.”

That’s not all. Analysts and budget officials who convened in Lansing recently for a twice-yearly conference projected that state revenue collections for the fiscal year that begins on Oct. 1 could rise by $574 million on top of their previous estimates.

But officials in the administration of Gov. Gretchen Whitmer appear to be preemptively waving off talk of using potential revenue surpluses to fix roads, or even of assuming that the revenue projections will pan out. MIRS News reported that State Treasurer Rachael Eubanks and Budget Director Chris Kolb are cautious about the figures, and state Budget Office spokesman Kurt Weiss added, “there are already tremendous demands on that money based on past policy decisions and the General Fund is under extreme pressure.”

Weiss may have a point, Douglas conceded, but that doesn’t mean using the money for roads shouldn’t be on the table.

Many state agencies would like to get some of the extra funds, Douglas said. “It is a judgement call about where the $900 million should go, but I don't see why putting it towards the roads is not a viable option.”

The governor’s office did not respond to request for comment.

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.