Region blanked in stimulus water funds

March 15, 2009
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The state did what Don Stypula indicated it would do in a Business Journal story that ran before the decision was made.

The savvy executive director of the Grand Valley Metro Council predicted the state would take $66 million in federal funds dedicated to water and sewer improvements from the stimulus package and loan those dollars to municipalities for their projects.

And that’s exactly what the state announced earlier this month that it decided to do, through its low-interest revolving loan program.

Stypula also predicted the loans would fund 16 projects and there wouldn’t be any local municipalities on the list. He was right, again, on both counts.

“I don’t see anyone in our neck of the woods on it,” he said after the list was released mid-week last week. “There was no one on this side of the state on this list.”

An overwhelming number of communities on the list are in southeastern Michigan, including Wayne, Washtenaw, Macomb, Monroe and St. Clair counties. Wayne County alone has four of the 16 listed projects, with a price tag that totals roughly $17 million.

But Stypula said the decision to loan those funds wasn’t a political one, as many other states have done the same thing with their water and sewer dollars from the package. He also said that local municipalities don’t like to participate in the state’s loan program.

“It’s very expensive to apply for a state revolving loan. It’s also very difficult (to complete),” said Stypula.

One area township decided to apply to the state for a loan a few years ago to fund a new wastewater treatment facility after hearing it was cheaper to go to the state than to the bond market. But it cost the township $50,000 just to apply and it didn’t get the loan. So the township ended up selling bonds through the county to pay for the project.

At least one Metro Council member didn’t think changing the state’s gasoline tax would provide more money for road improvements. Gov. Jennifer Granholm said earlier this month that she favors scrapping Michigan’s 19-cent levy on every gallon sold and going with a tax on the wholesale price.

“What we want to do is take the tax that is right now a flat tax and transform it into a percentage tax. If the price of gas goes down, (consumers benefit). If it goes up, it floats like many other taxes,” said Granholm, who said last year she didn’t support a hike in the gas tax.

But Tom Fehsenfeld, president of Crystal Flash, a gas and oil firm, and an at-large council member, said the current gallon price has fallen since last year and so have the number of gallons his company has sold. “Under this proposal, it won’t stabilize funding for roads. It won’t work,” said Fehsenfeld, whose firm collects the tax for the state.

Wyoming Mayor Carol Sheets said a tax on the wholesale price would likely make it more difficult for cities to forecast how much revenue each would get from a fluctuating tax. She was also concerned about what the new tax would mean for owners of small businesses in light of the struggles they’ve had with the Michigan Business Tax.

“This looks to be another hit to small business,” Sheets said of the proposed gas tax. “I know one small business that had a $300,000 hit from the Michigan Business Tax.”

Stypula said the state Senate will likely determine whether Michigan changes the tax, and he sees a very small window of opportunity ahead for a change to be made.

“We have only until the 4th of July to do this,” he said, “because on the 5th of July, the campaigning (for the 2010 election) will start.”

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