House GOP plan blocks state work on Gordie Howe Bridge
Lansing — House Republicans on Wednesday advanced a budget plan that would prohibit the Michigan Department of Transportation from using taxpayer money on the Gordie Howe International Bridge project even though Canada is reimbursing the state for relevant expenses.
Rep. Matt Maddock, R-Milford, said the provision would close a “loophole” in annual budgets that have already blocked state spending on the project. Canada has agreed to cover Michigan construction costs in exchange for future toll revenues.
Critics suggested the GOP budget language could delay or upend a massive project of significant economic significance that will connect Detroit to Canada, the state’s largest trade partner. Construction on the $4.4 billion bridge project began last year, and officials hope to complete it by late 2024.
The provision “would effectively stop the bridge from moving forward,” said former Lt. Gov. Brian Calley, a Republican who now heads the Small Business Association of Michigan. He argued the Gordie Howe is “arguably” the most important infrastructure project in North America.
“The idea of stopping this project now or trying to stop this project now I think just sends a really bad message to our industry,” Calley said, “and also to our partnership with Canada. They have been absolutely faithful in their commitment to reimburse the state 100 percent of costs associated with this project.”
GOP former Gov. Rick Snyder brokered the deal with Canada after the Republican-led Legislature refused to support the Detroit crossing, which will compete with the Ambassador Bridge that is privately owned by the powerful Moroun family. Canada also agreed to pay for construction of a U.S. customs plaza in Detroit after the Obama administration failed to commit resources through the federal budget.
MDOT has helped facilitate project planning and acquire land but has documented full reimbursement from Canada, including $24.8 million in the second quarter of 2019 for real estate activities in Detroit and advance construction preparation work for a connection to Interstate 75.
Canada repaid the Department of Transportation $83.5 million for work in 2018, including $34 million for land acquisition activities and $28 million for consultant fees and compensation. As of December, the state had secured 97.8 percent of the land needed for the project in Michigan, according to a report the department is required to file with the state budget office.
“Why should we continue to be a credit card for Canada?” said Maddock, who chairs the House Appropriations Subcommittee on Transportation.
The first-term Republican said he supports the Gordie Howe bridge project and wants it to move forward but thinks the Legislature should have additional oversight on any state spending, even if it is reimbursed.
Budget changes expected
Maddock predicted changes to the budget language "to make everyone happy" before a floor vote. One possibility would be only allowing state work if Canada provides funding in advance, he said.
"I don't think it's too much to ask to see a couple cancelled checks," Maddock said.
A separate budget proposal already approved by the state Senate did not include any new state restrictions for the Gordie Howe Bridge. Both chambers will negotiate a final budget in coming months with Whitmer, who has championed the bridge project.
“I think it’s a conversation we’ll just continue forward as we work through the budget process,” said House Appropriations Chairman Shane Hernandez, R-Port Huron. “A lot of that boilerplate language is… flexible as we go throughout the process.”
The Morouns, who have vigorously fought the Gordie Howe project, are major political donors. Family members have contributed more than $400,000 to state lawmakers, candidates and political committees since 2017, according to state records. Matthew Moroun this year gave $5,000 each to Hernandez's and Maddock's leadership accounts.
Rep. Joe Tate, D-Detroit, defended the state assistance on the project and questioned why Republican lawmakers would want to block work on the Michigan side of the bridge that is fully reimbursed by Canada. MDOT participation helps ensure construction timeline goals for the project, Tate argued.
“This not only creates immediate economic development opportunities for Michiganians through jobs along with second- or third-order investments but allows us the opportunity to strengthen Michigan’s relationship with its strongest trading partner,” he said.
Tate proposed an amendment to remove the new budget language pertaining the bridge, but majority Republicans on the House Appropriations Committee rejected it.
Michigan Department of Transportation spokesman Jeff Cranson said Canada is funding the bridge “because of the vital benefits it will provide to the flow of commerce between the two countries.”
“The project enjoys broad support from job providers and labor leaders across Michigan, and we are confident lawmakers know that,” Cranson said.
Bridge bids, mass transit cuts
The Gordie Howe spending provision is one part of a larger House transportation budget approved in committee and now heading to the floor that seeks to pump more money into road repairs without raising fuel taxes, as proposed by Democratic Gov. Gretchen Whitmer.
The plan would free up $542 million in additional revenue for roads through a series of complicated budget shifts, including a redirection of sales tax revenue on fuel that is currently devoted to K-12 schools and local governments. No plan has been presented on how the schools and governments would be held harmless.
The House plan also directs the state to solicit bids for potential sale of the Blue Water Bridge connecting Port Huron to Canada, four state-owned airports, eight welcome centers and a rail line that runs between Grayling and Gaylord.
It’s not clear how much the state could generate by selling its half of the Blue Water Bridge, “or how that would even be possible,” Cranson told The News. “Nearly $90 million in debt service remains on the bridge with a scheduled final payment in 2037. The bridge’s operations and debt service are covered by tolls.”
Democrats voted against the budget, arguing it does not go far enough to fix the roads — which they contend will require a fuel tax hike or some form of new revenue — but would gouge mass transit and passenger rail lines.
The budget would cut public transportation services $208,000, transit capital funding $10 million, specialized transit services for the disabled and elderly $2.7 million, a transportation to work program $581,000 and the state Office of Rail $572,000.
Instead, the House plan would create a $13.9 million “incentive challenge fund” that transit agencies could access if they create a plan to eventually ensure 20 percent of their operations are funded by rider fares.
“This will essentially be a tax on folks who regularly use public transportation because they will see their fees go up,” said Rep. Sarah Anthony, D-Lansing, who argued the GOP mass transit plan would “hurt seniors and vulnerable adults.”
Maddock said the budget would reduce “waste” within the Michigan Department of Transportation and ensure the focus is “on roads, not rails or airports.”
The plan would also require the state to solicit offers to operate daily passenger rail service between Grand Rapids and Chicago on the Pere Marquette line currently operated by Amtrak, which is “tremendously subsidized by the federal government,” Maddock said.
The House GOP plan calls for a $6.4 million cut in information technology spending by MDOT along with $21.3 million in additional operational cuts for the department, including $17.1 million for design and engineering services, $2 million for transportation planning and $1.4 million for finance, contracts and support services.
All told, it would increase state spending $388 million over the current year, cutting some areas to put $542.5 million in extra money into roads next year.
“I am proud to say that the Republican House does have a plan to fix our darned roads without going to Michigan taxpayers for another gas tax increase,” Maddock said.
Whitmer has consistently called for a much larger investment in roads to combat projections of continued declines despite a $1.2 billion 2015 road funding law that raised fuel taxes and registration fees.
Her 45-cent fuel tax proposal would generate $2.5 billion in additional revenue by 2021, with $1.9 billion in extra money for roads and $600 million for other budget priorities, including K-12 schools.
“As the governor has said, Michigan has the worst roads in the country,” Cranson said. “The condition of our roads and bridges are having a negative effect on the flow of commerce, driver commutes and tourism. We need $2.5 billion to restore our roads and bridges and give drivers peace of mind that they are safe.”