Fewer Workers, Costlier Materials Spike Road Repair Costs

Michigan lawmakers and Gov. Gretchen Whitmer are in the early stages of negotiations to come up with billions of dollars in new road funding money. But they face one disheartening and inescapable reality: Road money won’t go as far today as it did only a few years ago.

The cost of fixing the roads is sharply higher in 2019, according to local road officials, and it shows no sign of abating.

The Oakland County Road Commission, for instance, told the Mackinac Center for Public Policy that the cost of materials and equipment used for road building have risen steeply — in some cases, by as much as 100 percent in just the last 12 months.

As a result, the cost of paving a two-lane gravel road has jumped from $1.5 million per mile in 2013 to $2 million today, said Dennis Kolar, managing director for the road commission. The cost of repairing and resurfacing a mile of two-lane pavement has gone from $1 million to $1.6 million in the same period.

“The rise in the costs are a real concern as we’re trying to do more, but the money isn’t going as far,” Kolar said.

The reasons for escalating costs vary from tighter labor markets and diminished competition in the roadbuilding industry to stringent enforcement of environmental regulations and higher prices for acquiring property. None of them are amenable to a quick fix, Kolar said.

Oakland County faces an acute, localized, increase in the cost of aggregates as the number of gravel mining operations within its boundaries has diminished to near zero. That means the county is forced to pay more for a basic component of road building, which has to be shipped from farther away. The going rate for gravel used for road shoulders was $18 per ton in 2018; this year it is $36 per ton, according to the county.

Rising road costs are a reality across the state, said Ed Noyola, deputy director of the Michigan County Road Association of Michigan.

Clear, up-to-date data is not readily available, Noyola said, “but anecdotally, every region in the state is affected. The cost of (road) salt has gone through the roof. Steel, guardrails, liquid asphalt are all way up.”

Complex environmental regulations, interpreted and applied by a range of state, local and federal agencies, all add costs “that fall on the road builders,” Noyola said. “It just piles on ... and we have no control over it.”

Some rural road agencies have increasingly chosen to avoid federal regulations by entering into agreements with urban governments to swap their federal funding for locally sourced dollars, Noyola said. The swap allows them to move on projects more quickly and efficiently, he said, but probably doesn’t exert a lot of downward pressure on overall prices.

Oakland County’s Kolar also said he believes the road building industry, which contracted sharply in the wake of the 2008-09 recession, will only slowly expand, minimizing the benefits of increased competition in what is a relatively robust current market.

The bottom line: Taxpayers may pay up to $2 billion or more in new road funding, but they won’t get as much in new roads in return as they would have in the fairly recent past.