Looking For A Pot Of Gold

September 13, 2008
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GRAND RAPIDS — The Michigan Transportation Funding Task Force began looking for new money last week to repair roads and bridges and to make transportation and transit improvements, and Peter Varga was there.

Varga, executive director and CEO of The Rapid, the county’s public transit system, said before the task force’s initial meeting that if new sources aren’t found quickly to replace or supplement the 19-cents-per-gallon state gasoline tax, Michigan will lose $1 billion in annual federal matching funds — a loss that would severely cripple the state’s $3.2 billion budget for transit and transportation.

He said the loss of those dollars would mean the state wouldn’t be able to keep at least 90 percent of the highways in good condition, at least 15 percent of the bridges would fall into a critical condition, and transit systems would go out of business.

But Varga added that not just any revenue addition would do. He said the solution has to be sustainable over time and must be able to keep pace with the rising costs of materials and labor to make repairs and improvements.

“Gas-tax revenues are not a sustainable form of revenue in Michigan or the country because we’re moving away from gasoline,” he told members of the Grand Valley Metro Council, the planning agency that assigns transportation funds throughout the region.

“Another form of tax has to emerge,” he added.

Varga said a new carbon tax or a tax on the number of miles driven might be possible solutions, as might increasing the fee for a driver’s license or vehicle registration.

Metro Council member Tom Fehsenfeld said finding a new revenue source is one of the most important tasks facing the state and coming up with the right one could be the “engine that drives Michigan’s economy.”

But Fehsenfeld is also president of Crystal Flash, a gas and oil company that collects gas-tax revenue for the state, and he said the way the tax is structured needs to be changed. He believes the tax should be based on a percentage of a purchase, like the sales tax is, instead of a set per-gallon figure, like the existing 19-cent charge.

He felt the current system is flawed because when the cost of gas rises, consumers buy fewer gallons and the tax revenue drops. Basing the tax on a percentage, though, would help keep revenue up when the pump price rises because the tax would be calculated on an entire purchase amount and not on the number of gallons bought.

“The amount of dollars would be at the same level,” said Fehsenfeld.

State lawmakers have various bills floating around in Lansing that would allow counties to raise tax revenue if the money goes to road repairs. One would let a county board create a separate countywide gas tax. Another would let a county raise fees for drivers’ and chauffeurs’ licenses, along with vehicle registrations. A third would allow a county to add surcharges to licenses.

“I think that Ottawa County would support that legislation regardless of whether or not we would carry it out, because the county should have as much home-rule authority as possible to do that,” said Al Vanderberg, Ottawa County administrator.

“We also support letting county boards have an option to take over the road commission, even though that’s not a goal or an intent at this time,” he added.

Kent County Administrator and Controller Daryl Delabbio said he didn’t think his board would oppose any of the bills, if one or more gets the governor’s signature. Holding that position, though, doesn’t mean commissioners would exercise their newly found authority.

“Like Al said, anytime we can take on more local control over those things that directly affect us and our citizens, we’d be willing to. I doubt, at this point, that Kent County would consider any of those avenues, given the board’s propensity to not want to increase taxes or fees unless absolutely necessary,” said Delabbio.

“Having an option, though, is always appropriate,” he added.

The city of Grand Rapids has known firsthand for the better part of two years that less gas-tax revenue means fewer streets get repaired. Back in 2006, Deputy City Manager Eric DeLong told the Downtown Development Authority that the city’s street fund was low because tax receipts were down, and he asked the DDA to take on more repair work in its district. The DDA agreed to do that and has set aside more money for street work.

Varga said a final report from the task force is likely to be released next month. But he didn’t volunteer a prediction on what solution might be found in the document.

Nor did Varga guarantee that any action would be taken on the recommendation.

“I think most of us have enough courage to come up with the right solution,” said Varga of the 13-member panel. “The Legislature can do whatever it wants, despite what the task force recommends.” 

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