Michigan Governor OKs Transportation Funding Task Force

CHICAGO — Faced with declining revenues for the state transportation fund, Michigan Gov. Jennifer Granholm signed legislation this week to establish a task force to study alternative ways to finance the state’s transportation infrastructure. The 13-member task force will consider replacing or supplementing the current 19-cent fuel tax, as well as imposing new user and non-user fees, pushing for more federal funds, and tinkering with how current revenues are distributed among the state’s road, public transit, and aviation systems. The task force’s members will be appointed in the next few weeks and will have until April 1, 2009, to make recommendations for transportation funding. The task force is expected to issue a preliminary report by October 2008. Michigan’s current transportation revenue fund is almost entirely derived from the fuel tax, motor registration fees, and federal funding. Consumers also pay a 6% sales tax on gasoline purchases, but very little of that money goes toward the general transportation fund. Michigan’s total state and local transportation revenues are expected to drop from $1.942 billion in 2007 to $1.932 billion in 2008 and then to $1.929 billion in 2009, according to the Michigan Department of Transportation. State transportation expenditures are expected to decline as well, from $1.624 billion in 2007, to $1.327 billion in 2008 and then to $1.205 billion in 2009, according to MDOT estimates. Also nearing an end is the state’s three-year Jobs Today program, a highway and bridge construction program that is being funded with the issuance of roughly $650 million of grant anticipation revenue vehicle bonds. MDOT issued $477.6 million of 20-year Garvees or grant anticipation revenue vehicles in August 2007. It is possible the state will issue the final $130 million of Garvees in 2008 if interest rates are attractive enough, but most likely will wait until 2009, said Myron G. Frierson, MDOT’s director of the bureau of finance and administration. MDOT currently carries about $1.62 billion of outstanding state trunk-line fund bonds, another $250 million of outstanding comprehensive transportation bonds, and $485.1 million of Garvees. There are no plans to issue other transportation bonds in 2008, according to Peter Kessenich, managing director at Public Financial Management and MDOT’s financial adviser. While praising the task force legislation, one transportation lobbyist said the state needs a more immediate solution to road repair projects. “We have a problem that’s immediate now in Michigan,” said Mike Nystrom, lobbyist and vice president of government affairs for the Michigan Infrastructure and Transportation Association. “There are quite a few elected officials who are relying on this task force to be the end-all solution, and that is not the original intent. We need to have action now to make a positive impact.” The association has suggested raising the fuel tax by three cents a year for the next three years. But in an earlier speech outlining her goals for 2008, Granholm said she was opposed to any increase in the gasoline tax.