Michigan’s 2023 budget increases road funding, doesn’t require tax hikes

Gov. Gretchen Whitmer sparred with the Legislature early in her term over how to pay for maintaining and repairing the state’s roads. The governor argued that they couldn’t be fixed without a substantial tax hike, while legislators refused to impose new costs on Michigan residents.

This year, lawmakers reached a quiet agreement, increased transportation spending by $200 million, and didn’t raise taxes to do it.

In 2019, the Legislature wanted to increase the transportation budget without a tax increase. Whitmer, by contrast, wanted to phase in a gas tax increase of 45 cents per gallon. Legislators, including those in her own party, balked.

Three years later, things have changed.

“The governor finally agreed with legislators that the state can afford to spend more on roads without raising taxes,” said James Hohman, the Mackinac Center’s director of fiscal policy.

Whitmer’s new budget proposed a $481 million increase in state spending on roads, a 13% increase from the previous year’s budget. The governor vetoed the Legislature’s $375 million increase in road funding in 2019, the year she proposed the tax hike. If Whitmer’s plan for a tax increase had been approved, Michigan would now have the highest gas tax in America.

The Legislature’s recently passed 2022-23 budget provides $203 million more in state funding for transportation. Total state transportation funding for next year will be $3.971 billion once the bill is signed, up from $3.79 billion in the current year. Some of the increase is due to a temporary increase in federal funds.

Whether the increase gets the state to the point where Michigan’s roads are fixed faster than they fall apart depends on how costs and inflation compare to available revenue.