Snyders road to recovery includes better infrastructure

October 31, 2011
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Gov. Rick Snyder provided his long-awaited overhaul plan for the state’s indisputably failing infrastructure, with wide-ranging suggestions to pay for fixes and improvements.

Snyder’s overhaul is all inclusive and not targeted only to the state’s roads and bridges. “Revitalizing Michigan’s deteriorating infrastructure” includes everything from broadband service to dredging Great Lakes ports.

Each aspect of the plan is significant as Michigan begins an ascent back to economic prosperity, and as that occurs, the governor is correct in emphasizing a new structure of oversight and payments to accompany the big ideas.

Two aspects are likely to garner inordinate attention: his proposal to eliminate the state’s 19-cents-per-gallon gas tax and 15-cents-per-gallon diesel tax and transfer to a wholesale tax on fuel, and a state vehicle registration fee increase of approximately $10 per month to raise nearly $1 billion for infrastructure improvement.

Taxing wholesalers is a revenue-neutral proposition for the state and offers a more viable state revenue stream in current times. The gas tax declines as motorists cut back on use and vehicles become more fuel efficient. Some legislators have proposed increasing the gas tax instead, which would become an unending type of increase given those facts. Second, it is important to consider further depletion of such revenue as consumers are able to purchase hybrid and electric-powered vehicles. With that looming in the immediate future, the vehicle registration fee is likely to be the ultimate replacement of a “gas tax” and dependable source of state revenue.

Snyder further proposes allowing local governments to levy a local vehicle registration fee if approved by voters. The Michigan chapter of the National Federation of Independent Businesses correctly points out that such a feature would “create a patchwork quilt of local taxes” and likely local roadways across the state. The small business advocacy group proposes instead to have the governor consider statewide approval of a one-cent increase in the sales tax and dedicate it to road funding.

Another aspect of the governor’s planning emphasis is to connect to federal funds, which has seeded his opportunity to advance a second international bridge crossing, and which more recently resulted in $440 million in federal funds for accelerated passenger rail service from Detroit to Pontiac to Chicago. Michigan has forever been a “donor” state in terms of its return of federal transportation dollars. The infrastructure plan related to broadband service also links to $247 million in federal broadband funding.

As legislators and business owners regard the governor’s initiatives, one particular overriding aspect must remain: The discussion is about restructuring for the century in which we live.

“Modern roads, clean water and broadband access are among the building blocks of Michigan’s prosperity,” the governor said, also emphasizing Michigan “is ideally positioned to emerge as a global trade center due it its location within the international shipping and logistics stream between Detroit, Chicago and Toronto.”

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