Editorial: Use fuel sales tax to fix roads
If anyone thinks "fixing the damn roads" will be easy, they should take a look at the new report from the Citizens Research Council, an independent think tank that examined the options for funding Michigan road repairs.
The CRC says there are three viable choices for raising the money: Diverting existing revenue from other spending priorities, borrowing, and increasing taxes and fees.
Selling bonds to pay for road repairs is the most pain-free option in the near term, and one Gov. Gretchen Whitmer seemed to favor on the campaign trail.
But the report warns that borrowing merely passes the cost of today's road repairs onto future generations, and could make funding shortages even more severe in coming years. Revenue to service the debt would come out of the general fund. The Michigan Department of Transportation is already paying $160 million a year to pay down road bonds that were sold 20 years ago.
Hiking fuel taxes and vehicle registration fees was a key piece of the 2015 road funding package, resulting in Michigan motorists now paying the fifth highest transportation levy in the nation.
Going back to those wells would place a higher burden on the drivers in Michigan than faced by their neighbors in the Midwest.
That leaves diverting revenue from other places in the budget, which the CRC is correct in concluding is the best choice.
Michigan is unique in the nation in that it collects the 6 percent sales tax on gasoline, but doesn't use the money for road repairs.
Diverting the sales tax to the transportation fund would make $900 million annually available for road work. While that's still more than $1 billion a year short of what the CRC says is needed to bring roads into good condition, it would put Michigan on a true user fee system of funding its transportation needs.
But that would also leave a huge hole in other spending priorities. Currently, the gasoline sales tax revenue goes to schools and local communities.
It's not reasonable to think the state would cut nearly $1 billion from education and local revenue sharing.
So the challenge facing Whitmer and the Legislature is where to find the money to replace the diverted sales tax.
There's only two places: Higher taxes or spending cuts.
As the CRC report notes, only about $5.25 billion of the $11 billion General Fund budget is truly discretionary. To find $1 billion in spending cuts there would mean a complete reordering of what services state government provides.
As tough as it is to swallow, a tax hike seems inevitable.
But it should come, as the CRC suggests, with reform of how road funds are allocated. The current distribution formula is heavily weighted toward miles of road, rather than road capacity, usage and condition. The bulk of any new funds raised should go to the most heavily traveled roadways, and those in that category that are in the worst shape.
The governor and Legislature will likely have their own ideas for how to fix the roads when they begin work on the budget this month. But the Citizens Research Council report offers valuable guidance on the options before them.