MDOT director explains what happens if Proposition 1 passes or fails

Posted at 10:57 AM, Feb 02, 2015
and last updated 2015-02-02 10:57:03-05

GRAND RAPIDS, Mich. -- As director of the Michigan Department of Transportation, Kirk Steudle has to walk a fine line on Proposition 1. But he wants to be sure that Michigan voters understand what will happen when the issue passes or fails on May 5.

In December, the Michigan Legislature decided to put the issue of how to pay to improve the state's roads by having the voters decide. At first glance, the move looks like a way for lawmakers to dodge responsibility for raising taxes. But, says Steudle, the issue is a constitutional question, and only voters can decide to change the state constitution.

"The problem is what we pay at the pump includes sales tax that we all as citizens have said in our constitution that sales tax is constitutionally restricted for schools and cities," says Stuedle. "So we had two conflicting pieces. What you pay at the pump already in gas tax is constitutionally restricted to transportation, but then you have this other, this other sales tax on top of it that is constitutionally restricted to go somewhere else, and that's where the conflict has been."

The proposed solution is to remove sales tax from what we pay at the pump. "So that allows the fuel tax, the gasoline tax, to actually be raised," says Stuedle, which leaves some room to increase the per-gallon fuel tax to provide more money for roads.

But that creates a loss of revenue that would normally go to schools and revenue sharing.That's where the increase of sales tax from six percent to seven percent comes in.

"In essence, what it does when it's all said and done is what you pay at the pump will be constitutionally restricted to go to roads," says Steudle, "and what you pay for sales tax is constitutionally restricted to go for schools and revenue sharing."

If Proposition 1 passes in May, the increase in road money "basically stops the decline" of Michigan's roads, says Stuedle, who then uses the image Gov. Rick Snyder used in his State of the State address:  "Driving under bridges with plywood underneath them is not safe. The plywood is up there to keep the concrete from falling from the bridges."

If Proposition 1 fails, "we're just on the same trajectory." That trajectory is MDOT's increasing inability to keep up with repair and construction costs and to be able to win matching federal highway funds. The federal government often requires states to hit certain levels of funding to get matching funds from the federal gas tax we all pay. MDOT revenue in real dollars, not adjusted for inflation, was the same in 2012 as it was in 1998, but costs continue to rise: "Salt prices are higher, significantly higher, concrete's more expensive, asphalt's more expensive, the fuel that have to buy to drive all of our snow plows in the winter is more expensive," Steudle says.

Failure of the proposition also means Michigan continues to fall behind other states. Steudle points to Ohio as an example, as that state has similarities to Michigan in its economic structure. "They invest at billion dollars a year more in their roads, bridges, and buses in Ohio than we do. And they've been doing it for the last eight years." So Michigan is already behind Ohio by $8 billion in road investment since 2006.

From all of this information, you would think Steudle is urging passage of Proposition 1, but not so. As a public employee, he can't take sides, and he has instructed MDOT staff at all levels to avoid taking sides in any way during working hours. No MDOT materials, computers, social meia or emails can be used to express a preference, he says.