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$5 million in Michigan’s new state budget, signed into law by Gov. Gretchen Whitmer in late July, will go toward a study intended to gauge public interest in putting mile-tracking devices in vehicles.
The investment is the state’s latest effort to make up for the income lost on the gas taxes electric vehicles won’t be paying.
Michigan’s crumbling roads are no secret; they famously helped propel Whitmer to the governor’s office during the 2018 midterm elections.
45% of Michigan’s non-federal aid roads are in poor condition, according to a 2022 Michigan Department of Transportation analysis, the most recent data available.
35% were in fair condition, while only 20% were in good condition. State standards require 90% of roads to be in good or fair condition.
Every time drivers gas up in Michigan, they’re paying to help repair the state’s roads.
Al, an Okemos resident, said he’s been helping out the roads a lot lately.
“Lot of construction going on, lot of barrels blocking [roads], causing a lot of disruption, but at least the roads are getting fixed,” he said while filling up at a gas station in Okemos on Thursday afternoon.
The 28.6 cent-per-gallon gas tax on every fuel refill goes toward repairing roads and bridges in a state that’s become infamous for its aging infrastructure. Most of the state’s money for roads comes from sales and fuel taxes.
“Sales and excise taxes on motor fuel are a very fair and equitable way, for the most part, to fund our roads,” said Tyler Theile, vice president and public policy director for Anderson Economic Group in East Lansing. “It gives the consumer control over how much they’re contributing to road funding, based on their usage.”
What happens, though, when drivers don’t have to stop for gas anymore, and don’t have to pay those taxes because they’re in an electric or hybrid vehicle?
That’s the question lawmakers and policy experts are grappling with.
The level of underfunding for Michigan’s roads, though not entirely attributable to the rise in EVs, is large: $3.9 billion every year, according to a March 2023 analysis commissioned by the construction trade group Michigan Infrastructure and Transportation Association, or MITA, and conducted by Public Sector Consultants, or PSC.
“PSC’s research has said that [the gas tax] needs to be raised up to 74 cents per gallon in order to actually have enough money to fully fund the system, which we say is about a $9 billion a year system,” said Maggie Pallone, vice president of Public Sector Consultants.
Public Sector Consultants is currently providing the behind-the-scenes staffing support for Whitmer’s new Growing Michigan Together Council, which aims to better understand and create solutions to address Michigan’s lackluster population growth.
One solution to try to make up for the lost gas tax revenue has been adding an extra registration fee for EVs.
“That additional fee is not making up enough revenue and won’t into the future unless we come up with some other road funding mechanisms,” Theile said.
From 2019 to 2021, Anderson Economic Group estimated there was a $50 million loss in state revenue as EVs did not pay gas taxes.
“That road funding deficit will grow geometrically to hundreds of millions of dollars,” Theile warned.
The vast majority of vehicles on the road in Michigan continue to be gas-powered, so the problem may seem far off for some.
“I don’t think there’s enough EVs to impact [the state of the road],” Al said. “There’s not enough infrastructure to support the EVs, so at that point when they become the larger of gas versus electric then that’s going to be a problem.”
However, EVs are predicted to make up the majority of vehicle sales by 2040, according to analyses by Goldman Sachs Research and Morgan Stanley.
In Michigan, many solutions have been raised to keep revenue up despite changing sales: in-car mileage trackers, self-reporting during annual vehicle registration, a payment in lieu of mileage tracking and even toll roads.
Michigan doesn’t have a single toll road in it.
The idea has always been unpopular, but there is more will to consider it is a solution lately, according to Theile.
It’s also one of the best ways to profit from out of state visitors, Theile said
“None of these solutions are easy, and none of them are politically appetizing,” said Pallone. “But all of them, I think, have the will of the people behind them.”
Everyone who lives and drives in Michigan knows how bad the roads are firsthand, according to Pallone.
“We need to continue to invest if we want to have high quality roads that rival our neighbors,” Pallone said. “Our infrastructure is the backbone to our economic development, it’s the backbone to our community and it’s the backbone to everything we want Michigan to be.”
The mile-tracking approach isn’t unique to Michigan, as multiple states have considered it as a solution to vehicle changes.
The distilled message from policy experts is simple.
“This solution is money. There’s no silver bullet that’s gonna fix this,” Pallone said.
Generally speaking, Michiganders are willing to invest money into roads if they can be guaranteed they’ll see results, according to Pallone.
“That’s the big policy question, ‘what do we want our roads to look like’ and then ‘how much are we willing to pay to fix them?'” she said.