Motorists Still Paying For Engler And Granholm’s Road Debt

News reports suggest that Gov. Gretchen Whitmer may propose having the state taking on more long-term debt as a way to increase funding for road repairs. It wouldn’t be the first time Michigan took that path.

In a February 1997 editorial, the Detroit Free Press criticized then-Gov. John Engler for how he was dealing “with public outrage over the condition of Michigan’s roads. ...”

“But the governor’s wish list for avoiding a tax increase can’t come close to catching us up on the accumulated unmet needs,” the Free Press editorial stated.

One way Engler avoided tax increases was to use long-term state borrowing to pay for short-term fixes. By 1998 the state had already accumulated $378 million of debt in bonds issued to pay for road repairs.

And in September 2018, or 20 years later, the state still owed $34 million from that 1990s road debt, according to the Michigan State Treasurer.

Engler’s successor, Gov. Jennifer Granholm, also used borrowing to pay for roadwork, taking on long-term debt to increase road repair budgets in the short term.

Today’s motorists are not finished paying for the debt incurred by both governors. They are paying it back through a portion of current gas tax revenues as well as a part of their vehicle registration taxes, with the money going to investors (bondholders) rather than road builders. As of 2018, Michigan was still making debt service payments on $1.2 billion it borrowed for road repairs in the 1990s and 2000s.