MDOT director: State might need gas tax hike 'closer to 80 cents'

Michigan Department of Transportation Director Paul Ajegba said Gov. Gretchen Whitmer's proposed 45-cents-a-gallon gas tax hike might not be enough to fully address the problems found on local roads and bridges.

Ajegba told a Sept. 24 town hall in East Lansing the state still lacks accurate data from some local road agencies regarding the condition of their transportation structure. As a result, he said a 45-cent increase — which would generate an estimated $2.5 billion a year — might be inadequate to address those local needs.

A tax increase that addresses local roads as well as state-managed roads could be closer to 80 cents per gallon, a figure that Ajegba said is “not realistic.” The current fuel tax is 26.3 cents, last rising 7.3 cents in 2017.

“That’s the problem,” Ajegba said, according to audio of the event reviewed by The Detroit News. “We’ve dug ourselves such a huge hole that if you really want to take care of the problem, you’re almost going to be talking close to 80 cents a gallon. And that’s just not realistic.”

Ajegba’s comments at the town hall hosted by state Rep. Julie Brixie, D-Meridian Township, were first reported by the Spartan Newsroom, a publication of Michigan State University’s School of Journalism.

Whitmer said Friday she isn’t endorsing an 80-cent increase and noted that the director was talking about “taking into account everything” it would take to fix local and state roads. She added that the remarks were simply a comment at a town hall. 

“It’s not something we have proposed by any stretch,” Whitmer said. 

Ajegba continues to stand firmly behind Whitmer’s 45-cent proposal, a Transportation Department spokesman said Thursday, noting that his comments were made regarding the lack of data on local roads.

“His reference to 80 cents was speculation about what the total need could be if all local agencies quantified their conditions,” said Jeff Cranson, a department spokesman.  

Ajegba “agrees that 45 cents, phased in over 18 months as proposed, would restore much of the state trunkline pavement to much better condition within nine years,” Cranson added.

Whitmer's 45-cent gas tax increase was panned by Republicans and has yet to be introduced by any Democrats in the state House or Senate. In August, House Democratic Leader Christine Greig of Farmington Hills said the proposal effectively was dead and called it an “extreme” that likely won’t happen.

Legislative leaders have promised to work on a long-term road funding solution with Whitmer, but the discussions have been sidelined lately by conflicts over the state budget.

Senate Majority Leader Mike Shirkey, R-Clarklake, is doubtful taxpayers would "fork over" 80 more cents per gallon, but believes incremental improvements can be made "within the confines of what people can afford to pay," said Amber McCann, Shirkey's spokeswoman. 

"Knowing what we’ve heard from constituents regarding the appeal of 45 cents and how that was a non-starter, I can’t imagine taxpayers want to take on the burden of an 80-cent gas tax increase," McCann said. 

Rep. Beau LaFave, R-Iron Mountain, called the tax increase figures "utterly senseless" and out of tune with what drivers across the state are willing to pay.

"If the transportation director was floating a trial balloon with his call for an 80-cent gas tax increase, I’m here to tell him it ain’t happening," LaFave said in a Friday statement. 

Ajegba's Sept. 24 comments came during a discussion of the state’s Public Act 51, the state's road funding distribution formula that critics have said needs an overhaul.

Whitmer’s plan would maintain current distribution levels through Public Act 51, but direct new revenue from the proposed gas tax increase to a Fixing Michigan Roads Fund, which would distribute money to the most highly traveled roads.

The Democratic governor also expressed concerns about the lack of data on some local roads when she announced her plan in March, noting in a plan summary that 600 local agencies set their own condition goals and spending priorities.

“Local roads have needs as well, but the collective local need cannot be fully quantified,” the summary said. “…Clearly, though, substantial additional funds are also need for these roads.”

A resident at the town hall expressed concern that the public may not understand the new distribution formula.

“A lot of people think 45 cents is going to take care of all the roads, when in reality, it won’t,” said the resident, who couldn't be identified on the audio. “…Somehow or other these communications have to be made.”

“That’s really the crux of the problem,” Ajegba responded, noting that the problem was “so deep” that “you’re talking almost 80 cents” that could then be run through the PA 51 formula to address local road conditions as well.

Brixie said during the town hall that other alternatives to the gas tax included an increased sales tax, increased income tax or a graduated income tax through a voter-approved constitutional amendment.

But she noted that Whitmer’s proposal would “stop those shell games” that diverted funds from other priorities to roads, “freeing up more money for revenue sharing, which would then go to our local communities, which would give them a little more money to put into the local roads.”

eleblanc@detroitnews.com