Michigan Road Spending Near an All-Time High
And just as much as state would have spent if Proposal 1 passed
It may seem that Michigan is spending less and less money on roads. But state spending on roads this year ranks near the all-time high and is at the same level it would have been had voters approved Proposal 1 in May.
“This year’s road funding budget is worthy of praise,” said Rep. Peter Pettalia, R-Presque Isle, chair of the House Transportation Committee.
“At $3.9 billion, it is the largest transportation budget in state history, except for one in 2009 that used federal stimulus money and one some years back that involved the sale of permanent license plates.”
“Anyone who drives as much as I drive knows that we have projects under way all around the state,” Pettalia continued. “Money is being spent on roads — $400 million from the General Fund in the current budget. The biggest problem we have concerning road funding in this state is in agreeing to what should be the source of a regular revenue stream that we would put into roads each year. But that does not mean that we aren’t spending significant dollars on our roads.”
Michigan is spending $3.8 billion on its roads in the current (2015–16) fiscal year; that is a $171 million increase over the previous fiscal year. Nearly $2.2 billion is from funding sources dedicated exclusively for roads and about $1.25 billion is federal funding. Of the rest, $400 million comes from the state’s General Fund. Local and private funds provide slightly more than $50 million and about $4 million comes from interdepartmental grants.
The $400 million in General Fund dollars represents a major slice of the portion of road funding that Gov. Rick Snyder and the Legislature have been arguing over. Some people maintain that roads should be subjected to the same prioritization process as other government programs and that the General Fund is an appropriate source for this portion of the overall road funding picture. Others, however, maintain that General Fund dollars only should be used for government programs other than roads and that new funding sources specifically earmarked for fixing and maintaining roads (such as increased taxes and fees) are needed.
As things now stand, the General Fund is being tapped for road funding and the total amount of dollars being spent on the state’s roads — when compared to spending levels of previous years — is not meager.
“Legislators get beat up in the media for not having a solution for the roads,” said James Hohman, the assistant director of fiscal policy with Mackinac Center for Public Policy. “But they found $400 million of extra money in the budget to put toward road repair without raising taxes this year, the same amount that the proposed long-term solution (Proposal 1) was expected to generate.”
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
A Lesson from the Land of Lincoln: Electricity Competition Works
Michiganders could have saved $10.6 billion in energy costs
If you think the rule of law and fiscal responsibility are key components to growing economic prosperity in Michigan, you probably don’t often look to Illinois for new policy ideas. But there’s at least one lesson Michigan could borrow from the Land of Lincoln: full electricity choice. A recent study from the Compete Coalition estimates that electricity consumers in Illinois saved $41.3 billion from 1999 to 2014 as a result of the state opening up its electricity markets. The state now features the lowest electricity prices in the Midwest.
But things weren’t always so peachy in the Prairie State. As recently as 1997, Illinois had the highest electricity prices in the region. But shortly thereafter, the state embraced electricity choice and forced the regulated public utilities to compete with alternative energy suppliers. The result was Illinois outcompeted every other Midwest state on electricity prices over the next decade and a half.
Illinois electricity prices increased by just 15 percent from 1997 to 2014, moving from about 12 percent above the national average to 9 percent below it. Meanwhile in Michigan, electricity prices increased by 58 percent over the same period. And in Wisconsin, a state that allows for no energy competition, prices rose by a whopping 106 percent.
At the time when Illinois opened up its electricity market, its prices were very similar to Michigan’s and higher than those in Wisconsin. Tracking the difference between these prices over time allows one to estimate how much customers in Michigan and Wisconsin could have saved in electricity costs if they would have paid the Illinois price.
The results are eye-opening. Michigan residents paid $2.3 billion more in electricity costs in 2014 than they would have if prices here matched those in Illinois. Wisconsinites paid $1.3 billion more. But that’s just one year: The total amount Michiganders could have saved from 1999 to 2014 if prices here matched those in Illinois is an incredible $10.6 billion. Wisconsin residents would have saved about half that — $5.6 billion.
The Michigan Legislature is currently considering bills (Senate Bill 437 and House Bill 4298) that would all but choke out the little bit of electricity competition that exists in this state. Based on Illinois’ remarkable success, this seems like a very shortsighted move. Instead of cutting off cost-containing competition, Michigan lawmakers should follow Illinois’ lead and open up our electricity markets.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
Enjoying CapCon?
Make sure you aren’t missing anything! Sign up for our daily or weekly emails and get the quarterly print edition mailed to your home. All free!
Get CapCon emails! Get CapCon print!
No thanks, I prefer to visit the CapCon website!
More From CapCon