DALLAS -- Michigan needs to spend an extra $4 billion annually to create 21st century transportation, water, wastewater, and communications infrastructure systems, according to a commission formed by Gov. Rick Snyder.
Its report – released Monday -- makes more than 100 recommendations and offers a menu of options on how the state can fund the new investments. Funding options include federal, state and local tax dollars as well as user fees and bonding.
"This plan is not just about what infrastructure we need to fix – it's about where we want our infrastructure to be 30 to 50 years from now in order for it to be safer, more reliable, and more affordable for all Michiganders," said the commission's chairman, Evan Weiner, Snyder's
The commission was created under an executive order in March. The panel had 27 members. Weiner, the chair, is the chief operating officer and executive vice president of Edw. C. Levy and Co., a firm that provides asphalt, aggregates, and agricultural products and cement, slag, and steel mill services.
The report "is not an answer by itself but a road map," Snyder said at a news conference Monday.
"Our state's infrastructure challenges are serious and wide-ranging, and we need to act with urgency to improve our infrastructure systems and make Michigan an even better place to live," Snyder said. "Safe and reliable infrastructure is critically important to the health and well-being of the people of Michigan and will help support our growing economy in the future. Our state is poised to be a global leader in emerging technologies as we move forward in the 21st century, so it is essential that we have the infrastructure to match our goals."
Transportation infrastructure accounts for the biggest funding gap. The report shows that the state has an annual investment shortfall of $2.7 billion that will exceed $40 billion over the next 20 years.
The report recommends an increase in federal funding, a gas tax increase, local revenue option expansion or developing public and private partnerships as a way to possibly close the investment gap.
How some of the funding ideas might fare among state leaders is unclear.
"We are just now looking at the report and will have to review it as the draft budgets are put together early next year," said Gideon D'Assandro, spokesman for the majority House Republicans. "Overall, though, the plan highlights what we've been doing in Michigan. Last year, we finalized a landmark plan to spend more than a billion dollars of just state funding a year on roads and bridges in this state, and that is going to make a big difference in the quality of infrastructure in this state."
Michigan plans to spend $1.2 billion in road funding beginning in January.
"The legislature recently passed a road funding reform package that dedicates $600 million of general funds to roads," said Amber McCann, spokesperson for Senate Majority leader Arlan Meekhof, R-West Olive. "Other money comes from gas tax revenues and registrations fees."
Road funding is distributed via formula commonly referred to as "PA 51" in Michigan in reference to the public act that created it years ago. PA 51 prescribes the formula for distributing money to the state and local units of government for transportation projects.
Mike Nystrom, executive vice president of the Michigan Infrastructure & Transportation Association, or MITA, said every study that has been done on Michigan's deteriorating infrastructure points to the fact that the state needs at least an additional $2 billion annually just to maintain current roads and bridges. "Every year that the Legislature does not act, that funding need grows by over $100 million," said Nystrom.
The 21st century infrastructure commission report suggests looking at local revenue funding expansion. State mandates on how local municipalities fund themselves restrict local revenue raising flexibility.
Property tax revenue is currently the most important source of funding for Michigan municipalities. Michigan's Headlee Amendment and Proposal A are state level tax limitations on local revenues. Headlee took away local authority to levy taxes outside of property taxes and limited their ability to raise revenue. Proposal A limits the taxable value of a property. It can only increase by the rate of inflation or 5%, whichever is less.
The report also suggests looking at public and private partnerships as a funding source.
Last week, the Michigan Senate approved Senate Bill 627. The legislation allows for "Public Authorities" to enter into public-private agreements for the development of an eligible project. Eligible project is defined as a transportation project or facility project such as health care and laboratory facilities. The bill still needs House approval.
It enables the state to move ahead with projects under consideration such as mental health hospitals, veteran's facilities and laboratory facilities, but would limit the ability to move forward with additional projects without further legislative action.
Sen. Patrick Colbeck, R-Canton, who voted against the bill because he said it effectively removes legislative oversight of public-private partnerships, believes Michigan is only scratching the surface when it comes to using technologies and construction methods that allow for infrastructure that is "less costly to build or can last significantly longer," he said.
"There is also much waste in government that can and should be repurposed to infrastructure needs," said Colbeck.
Some suggest the state should foot the bill.
"Plenty more of our $50 billion state budget could be profitably dedicated to roads without having to ask taxpayers to dig deeper to support core functions of government," Joseph Lehman, president of the Mackinac Center for Public Policy, an independent, nonprofit research and educational institute, wrote in a blog entry on Monday.
The report found that the second largest gap in spending is in water infrastructure. Michigan needs to spend at least $1 billion more per year to get its water infrastructure up to speed, the report said. The report recommends aligning water rates with investment needs and water infrastructure fees as possible sources of funding.
MITA sounded the alarm on the state's underfunding of water infrastructure in an April report that said Michigan would have to more than double investment in water infrastructure to avoid crises like the disaster in Flint that occurred after the city switched water sources and improper treatment led to a contamination crisis.
MITA's report found that Michigan communities, which have collectively invested an average of $447 million a year between 2004 and 2013 on drinking water infrastructure, need to spend an additional $731 million to $1 billion on an average annual basis until 2030 in order to meet federal standard on clean drinking water.
The same was true for the money being spent on wastewater and storm water infrastructure. The report stated that Michigan communities already spent an average of $691 million each year but that amount falls short of meeting Michigan's long-term needs, "particularly for storm water management."
In May, Michigan's Republican legislative leaders and Republican governor settled on a budget framework that cuts funding for a proposed state water infrastructure fund to offset dwindling tax revenue while leaving intact $165 million in proposed aid for Flint.
"The [21st Century Infrastructure Commission] report issued today is bold in the solutions that it proposes and wise and practical in approaching the decades of work that needs to be done through an asset management planning process," MITA's Nystrom said on Monday. "Now it's time to get serious about approving some of the long-term solutions, recognizing that there is work to do at all levels of government, including the local, state and federal levels."
