CLOSUP Student Working Paper Series Number 12 December 2016
Michigan Roads and Policy Recommendations Jay Nautiyal, University of Michigan
This paper is available online at http://closup.umich.edu Papers in the CLOSUP Student Working Paper Series are written by students at the University of Michigan. This paper was submitted as part of the Fall 2016 course Public Policy 475: Michigan Politics and Policy, made possible through funding provided by the University of Michigan Third Century Initiative. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the view of the Center for Local, State, and Urban Policy or any sponsoring agency
Center for Local, State, and Urban Policy Gerald R. Ford School of Public Policy University of Michigan
Michigan Roads and Policy Recommendations
Jay Nautiyal PubPol 475 MPPS Paper
Beginning as a system of Indian trails long before European settlers habituated the area that now makes up the United States, the road system of Michigan has since become a largely pot-hole laden, cracked and all around damaged mess (Bessert 2016). In fact Metro Detroit’s roads are ranked among the worst in the nation, according to numerous reports (Lawrence 2015). Can harsh weather, and ice damage explain Michigan’s poor infrastructure, or is the problem an indicator of a deeper issue having to do with poor governance and management? Moreover, what can be done to fix the condition of Michigan’s roads, and is the current funding plan that is projected to raise 1.2 billion dollars for roads enough (Gray, Egan and Kathleen 2016)? Personally I do not believe so, and will outline the reasons as to why in this paper. In identifying the issue I will also argue that the best ways to raise money for roads are by further increasing taxes, allowing businesses to advertise on roadsides (billboards) and by encouraging placemaking to make Michigan communities more attractive to entrepreneurs. [Aside: This issue is significant because, roads are, I believe, the backbone to the proper functioning of a state, nation, or any sort of jurisdiction. If you, the reader, assess the situation, prior to reading the paper, you will recognize how true this is. Roads provide a means for people to get to work, to get home, to reach hospitals, their children, etc. Roads are therefore essential to human health, happiness, and the ability to earn.] Before an analysis, it is important to understand the story behind Michigan’s roads; it is also important to examine some potential reasons for the deterioration of
Jay Nautiyal PubPol 475 MPPS Paper the state’s infrastructure. Let’s start by examining the case of Michigan’s largest city, one that its economy was once largely dependent on: Detroit. Detroit enjoyed almost half a century or more of prosperity as home to a thriving automotive industry. Decline began to occur as racial tension arose in the 1940s when southern Black Americans began to migrate to Detroit, fleeing oppressive racial policies and searching for fair and more-lucrative employment. Unfortunately, while “the North” was touted as an equitable environment for people of all races, this was not really the case (Padnani 2013). Racial tension ultimately led to riots in the city. This was particularly detrimental because many middle class working white Americans fled Detroit, reducing the city’s population drastically. The riots had the effect of ruining the city and beginning the creation of blight and destroyed infrastructure. As a big portion of the middle class fled the city it also removed a stable tax base that only continued to worsen until the early 21st century, reducing Detroit’s funds. A string of unsuccessful mayors, from racists to those that failed to unify, further exacerbated the city’s issues. Furthermore, as foreign automotive companies began to produce cars that were in some ways more affordable than their American counterparts, Detroit’s automotive industry struggled. This was a disaster for Detroit, and the state, considering the lack of a diversified economy and dwindling population. There was not much for Detroit to fall back on (Padnani 2013). The story is the same for many other parts of Michigan as well. Dearborn and Flint are both examples of other Michigan cities that relied/rely on the automotive industry (Weber, 2013). The story of Michigan’s economy, population and
Jay Nautiyal PubPol 475 MPPS Paper infrastructure decline is closely linked to or at least mirrors Detroit’s performance. In fact Michigan was the only state in the Union to lose population in the early 21st century (Brush 2010). This is largely attributed to a further decline in the automotive industry as a result of the recession. While all of that can help to explain some of what is wrong with the state, it does not explain why areas of Michigan with a more solid tax base still suffer from poorer roads than our neighbors Indiana and Illinois. Part of the issue could stem from a lack of support for increased taxation. In 2015 Michiganders voted on whether the constitutional amendment raising sales and fuel taxes for roads and education would become law (P.Egan, 2015b). The amendment, however, did not pass, and there are multiple theories and concrete reasons as to why this was the case. For one, opponents of the proposal did not want to raise sales taxes in a move that would make Michigan’s among the highest in the nation (Drenkard and Walczak, 2015). Additionally, while there were many ad campaigns in support of Proposal 1, there were also many against them. While the opposition supposedly spent less on campaigning, the political commercials were undoubtedly harmful as they mislead the public into believing that their high tax expenditures would be spent on “special interests”, a vague term with a negative connotation (Horner, 2016). In this case, however, the special interests actually referred to education (P. Egan and Gray 2015; Oosting 2015a). Even still, some did not want education bundled with road funding, instead wanting a proper dedicated way to fund roads (Horner, 2016; Oosting 2015a). Perhaps most detrimental to the Proposal, however, was the lack of faith Michiganders had/have in Michigan’s Department of
Jay Nautiyal PubPol 475 MPPS Paper Transportation (MDOT). Michiganders believe that MDOT’s low quality job is the reason roads deteriorate so badly and believe that their money would go to the same old methods that have not worked in the past. This was one of the primary reasons that voters rejected the amendment (P. Egan 2015a). Ultimately Proposal 1 was the wrong way to approach road funding. It also demonstrated to the public the lack of initiative the Michigan legislature was willing to take to pass road funding on their own (Horner 2016). Leaving it to constituents was an irresponsible and perhaps insulting way to get out of doing work/using political capital. Putting road funding and parts of the tax code into the constitution would also pave way for inflexibility in the future if the rates of tax or amount of funding needed for roads were to be changed. On one hand future technology could make roads more durable and cheaper to fix, and our constitution would be raising unnecessary money that could stay with taxpayers. On the other hand opponents of raising taxes further would have a constitutional amendment on their side if more funds were needed for some reason. Having constituents vote on Proposal 1 also allowed for personal beliefs and values to get in the way of driver safety. For one, taxpayers did not consider that MDOT’s lack of quality may have been a result of underfunding. This demonstrates a systematic lack of understanding that is akin to a self-fulfilling prophecy. If voters believe that MDOT will do poorly with taxpayer money then it will do poorly with taxpayer money because the agency will not receive sufficient funds. So what is currently being done to fix roads in the state of Michigan? After the failure of Proposal 1 the state government realized that we still needed road funding in
Jay Nautiyal PubPol 475 MPPS Paper some form. Taking the initiative, the legislature and executive branch worked together to pass a road-funding bill that was a little more covert than Proposal 1. What the bill did was raise vehicle registration costs by $20 and increase fuel taxes (the cost a tank of gas, around 12-gallons, went up $0.88) (Horner, 2016; Oosting, 2015b). The funding plan is slated to raise around $1.2 billion for roads in Michigan, this time without “special interests” in the mix. Some of the projected total is taken, however from the general fund, which angers Michigan Democrats (Gray, Egan and Kathleen 2016). Republicans and Governor Snyder seem to think that $1.2 million is enough, and that the funding plan is in fact the most “fiscally responsible” way to raise money for roads in the state. Michigan Democrats, however, argue that the plan is fiscally irresponsible, arguing that the plan will raise taxes that will not go toward fixing the road problem, at least for now/in the near future. What Democrats are referring to is the fact that the road-funding package will not be phased until 2021, meaning it would take a while before roads improve significantly (Gray, Egan and Kathleen 2016). While 1.2 billion dollars, even if shelled out over a period of time, is certainly a start, it is estimated that the state will need closer to 2 billion dollars to fix roads (Stateside Staff, 2016; Michigan Infrastructure Committee, 2016; Horner 2016). The reason for the “discrepancy” arose from the need to ensure constituents would vote yes on Proposal 1 (so they wouldn’t think taxes were going up by too much). In fact the state’s non-partisan House Fiscal Agency believed that Proposal 1 would raise around $2 billion total (perhaps proof that it should not be overlooked as a model to raise more funds, despite failing to pass) (Sidorowicz, 2015). It is likely that the current road funding
Jay Nautiyal PubPol 475 MPPS Paper plan was made so that it would appeal to Republicans, who have a hard time justifying/supporting tax hikes, despite potential benefits (Gray, Egan and Kathleen 2016). But what do local officials statewide think is necessary? Considering the current budget for roads uses over $2.2-2.5 billion dollars in state funds and over 1.2 billion from federal funds for roads the $2-billion-dollar estimate may be conservative based on results from the University of Michigan’s “Michigan Public Policy Survey” (MPPS) (Steffens, 2014; Oosting 2015b). According to MPPS data a majority of officials from the county to village level believed that we needed at least a 100% increase in state funding for roads if not more. A total of 2% of local officials said that no increase in funding was needed, whereas 27% stated that only a 50% increase is needed. 15% of MPPS respondents were unsure how much funding needed to be increased by, but we could interpret that this means they understand it to be a problem that needs to be addressed (CLOSUP Staff). This is the case for a multitude of likely reasons. For one, fixing Michigan’s roads is a matter of public safety. Perhaps the most identifiable and dangerous characteristic of bad roads are potholes. They can range from minor annoyances to the driver to dangerous obstructions that can cause accidents or cause the driver to lose control of their vehicle. All around the country, and the world, poor roads and potholes specifically are one of the many causes of trafficrelated death. In fact, in the few years surrounding the turn of the century it was estimated that 24,000 Americans died in car crashes that were not caused by driver error or car impairment (AAA 2003). Furthermore, nations with poor roads account for
Jay Nautiyal PubPol 475 MPPS Paper 90 percent of traffic-related deaths (Dreazen). Considering that we have some of the worst roads in the nation that should be an important statistic to consider, even if only for Michigan’s reputation. On a somewhat related note, fixing roads would be the most cost effective way to reduce the costs of private (and public) vehicle operation. It’s estimated that broken roads cost drivers on average over $500 a year nationally, and around $900 here in Metro Detroit (Ingraham; “Survey: Metro Detroit’s…”). Considering Michigan has a reported 7,065,438 licensed drivers, we can conservatively estimate (using the $500 value) that drivers around the state could be paying at least $3 billion dollars to repair damage to their cars as a result of poor road conditions (“Licensed Drivers Total…”). Suddenly higher sales and fuel taxes (components of Proposal 1) don’t sound so bad. Furthermore, even if the cost of car repairs are actually three times less than estimated, the cost of Proposal 1 to taxpayers would still make sense. Providing safer roads could also create a positive feedback loop in our state’s economy. Better roads equal easier commutes to work, which would make it less likely for people to take days off when roads are in dangerous conditions. This would translate into a higher income, and an increased ability to pay the higher taxes that would go toward roads. The Michigan Infrastructure Committee’s report has shown that every $1 invested in the transportation sector has an economic impact of $4.24. Furthermore it’s been shown that “deferring infrastructure investments” and waiting to do so when the infrastructure gets much worse will only raise the total costs of repair. Maintenance is key (2016).
Jay Nautiyal PubPol 475 MPPS Paper Good roads also attract businesses to the state and help spur economic growth (that can in turn be used to fund roads). Numerous studies and surveys have been done citing the importance of transportation infrastructure when businesses choose to locate themselves. As I argued above, one reason undoubtedly has to do with ease of transporting workers and goods (if the business deals with transportable goods). Furthermore for businesses that rely on the physical presence of consumers, good roads are very necessary. A business would be hurting itself if it were to choose to operate in an inaccessible or unsafe location. This hurts workers, consumers and many alreadyexisting local businesses and organizations (Lawler 2015; Greenwood and Heinlein 2015). Critics of this view would argue, however, that with an increased commitment to infrastructure quality comes higher taxes. High taxes are often considered a deterrent for businesses as it directly eats into their profit. While to an extent this is true, it is noteworthy to consider that for many businesses city tax rates are not the most important factor in whether or not a business chooses to locate itself in a specific area. In fact talent is more important, and thus it would make economic sense to fix roads if Michigan's talent is what is going to be attracting businesses anyway (M. Egan, 2011). Granted that talent is important, Michigan communities need to take steps to attract talented young people into the state, and keep in-state graduates interested in making lives for themselves here in Michigan. One way to do this is by placemaking. Placemaking is an economic development strategy in which “policymakers attempt to capitalize on local assets in order to create appealing and unique places where people
Jay Nautiyal PubPol 475 MPPS Paper want to live, work, and play”. Placemaking has become an “increasingly common economic development strategy in Michigan” according to many local leaders. These leaders’ response results in a MPPS survey showed the economic development strategy’s use increased to 34% from 21% over a five-year period beginning in 2009 and ending in 2014 (Ivacko and Horner, 2014). Specifically, those who utilize placemaking as a policy strategy hope that creating “vibrant downtowns”, among other public spaces, for example, will attract workers and entrepreneurs to the area. This will in turn attract business that want to hire these workers, a fact backed up by statements previously made in my paper, and spur economic development (Ivacko and Horner, 2014). As far as road funding goes, placemaking as a strategy can couple with revenue sharing among Michigan’s jurisdictions to raise money for the deteriorating infrastructure. In order to attract businesses and workers there would need to be good roads in the first place, so putting what money we have and concentrating it in urban areas most likely to be “placemade” can start the process of generating more funds in the long-run. This strategy does, however, forgo some short term spending on roads in areas that are unlikely targets for placemakers, and therefore garnering support among those living in rural areas, and their legislators, could be an issue. This issue, however, may not be much of an issue if local leaders and their constituents are properly informed. I believe this to be the case as data from the Michigan Public Policy Survey (MPPS) shows that 89% of local officials believe that without state funding maintenance of roads would cause some problem, whereas 53%
Jay Nautiyal PubPol 475 MPPS Paper of all local officials surveyed believed it would be a significant problem. 65% surveyed believed it would be a significant problem to improve roads without state funding, and 91% of those surveyed said it would at least be somewhat of a problem. This goes to show that constituents, as well as local officials, recognize that there is an issue and that state funds are necessary to help fix it. If they understand how placemaking can raise money for their jurisdictions they may be more likely to support it (CLOSUP Staff). Below is a chart made from MPPS survey data that outlines local officials’ general view on the current condition of Michigan’s roads within their jurisdictions. Opinions on the Current Condition of Roads Fall 2014
.6466% 17.93% 24.57%
56.85%
Good Poor
Fair Not Applicable or Don't Know
While economic development strategies are important, it would also serve Michigan to look to surrounding states, states with some of the best infrastructure in the nation, for guidance. Looking to Pennsylvania, Florida, Georgia and Minnesota are also important since they too have top-tier roads (“10 States in America…”). Of course not all of these states have issues with cold weather, which was considered one of the
Jay Nautiyal PubPol 475 MPPS Paper reasons MDOT’s roads fall apart so quickly after their construction, so we must take that into account. When looking at these states, it is evident that the failings of Michigan’s roads stem from the fact that we spend the least (in the nation) on roads per citizen. It is reported that Michigan spends around $154 per person on roads. In comparison, Indiana spends $289 per person on roads; Ohio, Illinois, Wisconsin and Minnesota spend $214, 412, 302 and 274 respectively on roads. Pennsylvania spends a whopping $530 per person (“Reality Check”). Much of this money in our state could come from raising taxes, fuel taxes, sales taxes, etc. Perhaps one of the most important things to note that when raising taxes, we must consider where we are getting said taxes from. The current road funding plan utilizes fuel taxes to get its money, however, this is an issue as gas prices are currently falling (Kahn). This may become particularly problematic in the future. For this reason I would propose raising sales taxes. Despite being unpopular it would solve the fuel tax issue. Another way in which funds could be raised for roads is through opening up roadways to advertisers and encouraging businesses to erect or use old billboards along roads. Coupled with the previously talked-about placemaking, this could be a lucrative strategy once, or if, placemaking manages to achieve what it sets out to achieve. I believe that all of these strategies will undoubtedly make roads better in the state of Michigan. I predict, however, that raising taxes will not sit will with a majority of the communities in the state, primarily conservative/republicans. Furthermore, the
Jay Nautiyal PubPol 475 MPPS Paper placemaking strategy I laid out also would not have an immediate impact on rural communities and would potentially alienate local leaders and their constituents in their regions. In order for these strategies to work their needs to be a lot of political bargaining as well as education by special interest groups (not the bad kind) that can provide evidence that these policies will work. Of course, that’s not to say that rural communities will be ignored in the initial stages of my recommended action. The current road funding plan should provide enough funds for a large majority of the state. The rest can be raised in many ways. I personally suggest using as much of the road funding plan as needed to fix Detroit’s and other urban hubs’ roads that will then pave way for businesses, especially businesses that will attract entrepreneurs, such as restaurants, bars, and those that specialize in creating social spaces. The city can use the funds from an expanding tax base to further “placemake” these urban centers and ultimately create a place where all the “talent” wants to be (remember talent is what attracts businesses). At this point it may not even be necessary to raise taxes as the stable tax base could potentially provide ample funds to the maintenance of city and state infrastructure. The state government could then collect funds from the “placemade” cities in a sort of revenue sharing type tactic and allocate them to roads around the state. Of course, all of this sounds easier than it actually is, and what’s most important is to remember that there is not solution that is quick and easy. Raising taxes could be a quick solution that would raise consumer costs and cause a lot of backlash and government mistrust (at least until people see where the taxes are going), whereas the
Jay Nautiyal PubPol 475 MPPS Paper other strategies could take years, if not decades to see results. Regardless, despite not being simple, Michigan is capable of fixing its transportation infrastructure if it takes the right steps. Works Cited 10 States in America with the Best Infrastructure." CNBC. CNBC, 12 July 2016. Web. 12 Dec. 2016. AAA. "Dangerous Roads and Intersections Factor in over 24,000 Deaths; AAA Offers Ten Ways to Make Roads Safer, Launches Safety Initiative Targeted at Seniors - Most Vulnerable Population." Business Wire. Berkshire Hathaway, 23 June 2003. Web. 12 Dec. 2016. Bessert, Christopher J. "Welcome!" Michigan Highways: The Great Routes of the Great Lakes State. N.p., 25 July 2015. Web. 12 Dec. 2016. Brush, Mark. "Census Shows Michigan the Only State to Lose Population." Michigan Radio. N.p., n.d. Web. 12 Dec. 2016. CLOSUP Staff. "The Michigan Public Policy Survey (MPPS)." MPPS Fall 2014 Data Tables | Center for Local, State, and Urban Policy. University of Michigan-- Ford School of Public Policy, Fall 2014. Web. 12 Dec. 2016. Dreazen, Yochi. "Roads Kill: The Toll of Traffic Accidents Is Rising in Poor Countries." The Washington Post. WP Company, 13 Jan. 2014. Web. 12 Dec. 2016. Drenkard, Scott, and Jared Walczak. "State and Local Sales Tax Rates in 2015." Tax Foundation. N.p., 8 Apr. 2015. Web. 12 Dec. 2016. Egan, Matt. "Talent Trumps Tax Incentives in Corporate Relocations." Fox Business. Tribune, 1 Apr. 2011. Web. 12 Dec. 2016. Egan, Paul, and Kathleen Gray. "Michigan Voters Soundly Reject Proposal 1 Road Tax Plan." DetroitFree Press, 6 May 2015. Web. 12 Oct. 2016. Egan, Paul. "Are Michigan Roads Built to Last? Cash Is Key." Detroit Free Press. N.p., 26 July 2015. Web. 12 Dec. 2016. Egan, Paul. "With Proposal 1, More Fuel Tax Money Will Go to Roads." Detroit Free Press. N.p., 28 Mar. 2015. Web. 24 Oct. 2016.
Jay Nautiyal PubPol 475 MPPS Paper Gray, Paul Egan and Kathleen. "Road Funding Bills Pass Michigan House, Senate Finally." Detroit Free Press. N.p., 03 Nov. 2015. Web. 12 Dec. 2016. Heinlein, Tom Greenwood and Gary. "Report: Bad Roads Put Michigan Recovery in Jeopardy." Detroit News. N.p., 20 Apr. 2015. Web. 12 Dec. 2016. Horner, Debra. "Transportation Policies." Public Policy 475. University of Michigan, Ann Arbor, MI, U.S.A. 21 Nov. 2016. Lecture. Ingraham, Christopher. "Where America’s Worst Roads Are — and How Much They’re CostingUs." Washington Post. The Washington Post, 25 June 2015. Web. 14 Oct. 2016. Ivacko, Thomas, and Debra Horner. "Michigan Local Governments Increasingly Pursue Placemaking for Economic Development." The Center for Local, State, and Urban Policy. University of Michigan-- The Ford School of Public Policy, Jan. 2014. Web. 12 Dec. 2016. Kahn, Chris. "4 Reasons Gasoline Prices Will Keep Falling | Bankrate.com." Bankrate. N.p., n.d. Web. 12 Dec. 2016. Lawler, Emily. "Businesses May Think Twice about Locating along Michigan's Bad Roads." MLive.com. Advance Digital, 07 Apr. 2015. Web. 12 Dec. 2016. Lawrence, Eric D. "State of Michigan Roads Go from Poor to Terrible." Detroit Free Press. Detroit FreePress, 28 Mar. 2015. Web. 14 Oct. 2016. Licensed Drivers Total Number Statistics - States Compared - Transportation Data on StateMaster." RSSStats. StateMaster.com, n.d. Web. 14 Oct. 2016. Michigan Infrastructure Committee. "21st Century Infrastructure Commission Report." (2016): n. pag. Michigan Infrastructure Committee. 4 Dec. 2016. Web. 12 Dec. 2016. Oosting, Jonathan. "What Michigan's New Road Funding Rules Mean for You, Your Taxes and Your Roads." MLive.com. N.p., 11 Nov. 2015. Web. 24 Oct. 2016. Oosting, Jonathan. "You Ask, We Answer: How Much Does Michigan Spend on Roads Already? How about Mass Transit." MLive.com. Advance Digital, 31 Mar. 2015. Web. 12 Dec. 2016. Padnani, Amy. "Anatomy of Detroit’s Decline." The New York Times. The New York Times-Jackie Myint, 16 Aug. 2013. Web. 12 Dec. 2016.
“Reality Check." Michigan.gov. N.p., 25 Feb. 2016. Web. 12 Dec. 2016.
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Sidorowicz, Josh. "Road Proposal: How Much Extra Tax Revenue Will Actually Be Raised?" Fox17. Tribune, 16 Feb. 2015. Web. 12 Dec. 2016. Stateside Staff. "How Much Will It Cost to Fix the State of Our Roads?" Michigan Radio. N.p., 25 Mar. 2014. Web. 12 Dec. 2016. Steffens, Glen. "Transportation Funding." (n.d.): n. pag. Senate Fiscal Agency, Aug. 2014. Web. 12 Dec. 2016. “Survey: Metro Detroit Roads 4th Worst In Nation, Cost Drivers Nearly $900 Each Year." CBS Detroit,23 July 2015. Web. 14 Oct. 2016. Weber, Peter. "The Rise and Fall of Detroit: A Timeline." The Week - All You Need to Know about Everything That Matters. N.p., 19 July 2013. Web. 12 Dec. 2016. “Who Pays for Roads in Ohio?" Who Pays for Roads in Ohio? (n.d.): n. pag. Policy Matters Ohio. Web. 12 Dec. 2016.