News Story

Two-Thirds Of Last Year’s Gas-Tax Hike Pays Debt On Roadwork Done Years Ago

The good news is, no new borrowing since 2011, so debt is coming down

While Michigan politicians are engulfed in perennial debates over finding more money for road repairs, each year about $200 million of current state transportation revenue goes not for concrete and asphalt, but to repay debt incurred on road repairs completed years earlier.

In the current fiscal year, $206.0 million of the money Michigan spends on roads will go to repay principal and interest on this debt, according to a House Fiscal Agency memo. To put this in perspective, the state tax increase that added seven cents to the price of a gallon of gas, starting in 2017, was projected to generate an additional $313 million for road repairs this year.

As of 2015-16, the state still owed some $1.463 billion on road repairs completed years earlier. The good news is, no new road debt has been incurred since 2011, and the total amount owed has been coming down: In 2011, the state owed $2.064 billion for road repairs. The high-water mark for Michigan’s road debt was $2.258 billion, owed in 2009.

The current debt goes back to 1989. Both Govs. John Engler and Jennifer Granholm championed major debt initiatives to fix roads now and pay for it later.

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.