Michigan will nearly double its spending on state highways and bridges over the next five years under Gov. Gretchen Whitmer’s $3.5 billion bond initiative she announced Wednesday during her State of the State speech.
Nearly 40 percent of the new bond proceed spending will target reconstruction and rehabilitation efforts in Metro Detroit, including $764 million for Oakland County projects on Interstate 696, I-75 and I-96, $492 million for Wayne County projects on I-275, I-94 and M-14; and $126 million for Macomb County projects on I-94 and M-59.
All told, bond funding will be directed toward 49 reconstruction projects in 19 counties located in the bottom half of the Lower Peninsula, according to lists provided by MDOT. But transportation officials say the bond sales will free up funds to accelerate another 74 rehabilitation projects across 27 counties, including work as far north as Chippewa County.
“This is a statewide initiative,” Transportation Director Paul Ajegba told reporters after members of State Transportation Commission voted unanimously on Thursday to authorize the bond sales over four years.
Those sales will allow the Michigan Department of Transportation to spend $7.3 billion on state highways and bridges over the next five years, up from $3.8 billion that had been planned.
House Speaker Lee Chatfield, R-Levering, called the bond plan “unfair” and said it reflects an ongoing hostility toward rural Michigan by the Whitmer administration.
The Legislature has limited ability to prioritize where the bonding proceeds are spent, which should be a “concern for all taxpayers in Michigan,” said Senate Majority Leader Mike Shirkey, R-Clarklake.
The department’s revised five-year plan includes investments in all regions of the state and generally reflects traffic volumes: Regions with more drivers will see more highway and bridge improvement projects.
The state plans to spend about $2.65 billion on projects in Metro Detroit through 2024. That would amount to roughly 36 percent of state trunkline spending over that span in a region where drivers logged 32 percent of all vehicle miles travelled last year, according to state figures.
By comparison, the state will spend $225 million in the superior region, which includes all of the Upper Peninsula.
That’s about 3 percent of its statewide total in a region where roughly 4 percent of all vehicle miles were traveled.
“Southeast Michigan has the most population, and the governor wants to focus the spending on the most heavily travelled roadways with economic significance,” Ajegba said.
“The northern part of Michigan’s roads are fairly better than the southern part.”
If residents in rural areas want more road funding, Whitmer suggested they call their legislators and “tell them to get serious” about developing a long-term and comprehensive plan beyond highways.
“This plan will improve roads in every part of the state,” she said in a Thursday morning media roundtable.
“It’s not about one area or another. This is about managing an asset we all rely on, on which our economy relies to ensure that we don’t go so far and that we don’t recover.”
Whitmer compared the bonding plan to homeowner taking out a mortgage to build a new roof.
“Sometimes for long-term investments, the wisest thing you can do is lock in a low interest rate and actually fix the problem,” she said. “And that’s where we are. That’s what we’re doing.”
A resolution approved by the transportation commission will allow the state to issue up to $3.5billion in bonds over the next four years. The department will determine when to sell the bonds based on project needs.
Interest rates on a 25-year-bond are relatively low at between 2.5 percent and 3.5 percent, said Laura Mester, chief administrative officer of the Michigan Department of Transportation.
The department assumes that inflation would increase the cost of rebuild projects each year of inaction, she said, supporting Whitmer’s claim that bonding could save the state money in the long run.
“This is the perfect time to do a bond issue because we can get interest rates so cheap,” Commissioner Helen Zeerip said before the vote.
Five of the six members on the transportation commission were appointed by Republican former Gov. Rick Snyder, who warned against borrowing throughout his term. But in granting approval for bonding authority, several said they saw an immediate need to protect critical state assets.
Without more spending, Michigan roads “will go over a cliff, and it’s not recoverable,” said Chairman Todd Wyett, citing long-term pavement condition projections.
“For four years we watched this state get nearer and nearer, and this is the first time that we’re going to take a step back from the cliff.”
But Wyett called on Whitmer and the Legislature to continue work toward a long-term plan to pay for infrastructure maintenance beyond the short-term bond funding influx. “The 10 million people who live in the state deserve it,” Wyett said.
State law does not allow the governor to unilaterally bond for local roads, which is why the new plan will only boost spending on state highways and bridges. The governor’s original proposal for a 45 cent fuel tax hike would have generated new revenue for state and local agencies.
“She put a plan on the table,” Ajegba said. “There was no alternative plan. I would think now the onus is on the Legislature to come up with an alternative plan, and then both sides can get together to try to find a happy medium.”
State policy will prohibit MDOT from structuring the bonds in a way that requires debt service payments of more than $300 million per year. The state will spend about $118 million to pay down old road bonds this year, but most of that debt will be retired by 2027.
Mester said MDOT will make the new debt service payments using its only share of annual transportation tax revenue, which means the bonds will not reduce funding for local road agencies by shaving money off the top of the state’s traditional funding formula.
“Not at all,” Ajegba said.
This article appeared in Bridge Magazine. Read more here.