Michigan’s record on infrastructure: Ignore everything

Michigan’s roads, bridges, dams, harbors, water and stormwater systems are all in need of long-term repairs. That costs lots of money. What would cost more? Not making plans to start paying that money now. (Bridge/Crain’s photo by Michael Lee II)

LANSING — In the summer of 2003, a massive power outage brought a swath of the eastern United States and Canada ‒ including much of Michigan’s Lower Peninsula ‒ to a standstill.

The blackout, which started when a single electrical wire touched a tree in Ohio, left roughly 50 million people in the dark for days, and exposed the vulnerability of the electric grid.

In August 2007, an eight-lane bridge on Interstate 35W in Minneapolis collapsed, plunging vehicles into the Mississippi River below and killing 13 people. Work was being done on the bridge shortly before it buckled, though federal investigators determined the likely cause was a design flaw that left the bridge unable to handle an increased load.

On a single day in August 2014, metro Detroit was deluged with 5 to 6 inches of rain. The storm swamped drain pipes, which in turn flooded freeways and backed up sewage into basements across the region.

All of these were major infrastructure breakdowns. Often, though, problems with infrastructure stay out of sight and out of mind until something goes wrong ‒ like, say, underground lead pipes ‒ as long as drinking water is properly treated for corrosion. So our infrastructure to-do list continues to grow: Aging bridge supports.

Combined storm and wastewater sewers. Rural counties without wide access to broadband Internet.

That lack of attention is costing us.

Just 57 percent of the nation’s estimated $3.3 trillion in necessary infrastructure repairs by 2025 are funded, according to a new report by the American Society of Civil Engineers, a professional organization based in Reston, Va. The report doesn’t break out state-by-state estimates.

Delaying needed infrastructure repairs for surface transportation, water systems, electricity, airports and seaports could result in nearly $4 trillion less in U.S. GDP by 2025 ‒ a figure that could balloon to more than $14 trillion by 2040 if left unchecked, the report said. By 2025, poor infrastructure conditions could cost U.S. businesses more than $7 trillion in sales and 2.5 million jobs.

Michigan has had the dishonor of having the worst infrastructure of all 50 states: It earned a D letter grade in the ASCE’s last state infrastructure report card, in 2009. An updated state report is due next year.

“We can’t function as a high-functioning, well-oiled economy if we’re not funding infrastructure appropriately,” said Brian Pallasch, the society’s managing director of government relations and infrastructure initiatives.

Whether it’s importing foreign goods into American ports or exporting vehicles from Detroit, he said, “our infrastructure is the backbone of that economy. If you have frequent power outages, businesses can’t continue to do the manufacturing they need to do to make the economy work.”

Infrastructure is now the top public policy priority among Michiganders ‒ beating even jobs and the economy ‒ for the first time in the history of a Michigan State University survey that tracks the subject. The topic also topped the list in a recent survey of Crain's subscribers.

Organizers of this year’s Detroit Regional Chamber Mackinac Policy Conference, taking place this week on Mackinac Island, expect infrastructure to be a prominent discussion topic.

Sandy Baruah, the Detroit chamber’s president and CEO, told reporters this month that Michigan’s business community believes the state has underinvested in infrastructure for years ‒ a problem that could affect companies’ ability to grow and recruit talent.

Yet in some ways, the newfound attention speaks to our tendency toward reactivity, rather than proactivity, according to economists, engineers and other industry professionals.

When infrastructure fails, it can fail in such dramatic form that it dominates headlines, prompts investigations ‒ and sometimes reforms ‒ and raises the level of public consciousness to the problem. That happened after the 2003 blackout and again in Minneapolis.

Nowhere is that happening more today than in Flint, where Gov. Rick Snyder’s administration and city leaders are trying to contain a public health emergency caused by lead-contaminated drinking water.

Dozens of lawsuits have been filed since a state-appointed emergency manager switched the city’s drinking water source from Detroit’s system to the Flint River in 2014. State and federal agencies are investigating. Employees tasked with ensuring safe drinking water have been criminally charged. And city and state leaders still are working to make the water safe enough to drink.

Snyder has convened a task force to study all of the state’s infrastructure systems, their interconnectedness and which repairs should take priority. He asked the Legislature for $165 million in seed money for a new statewide infrastructure fund, though the amount likely will be less because the state anticipates it will take in less revenue this year.

Our renewed interest in infrastructure, engineers and economists suggest, points to a deeper problem.

Weaknesses in the system are increasingly noticeable because conditions are getting worse. They’re getting worse because states, including Michigan, don’t invest enough into ongoing maintenance. Because infrastructure isn’t sexy, politicians don’t always champion the cause as strongly as competing budget priorities given limited resources. Tea party conservatives have brought anti-tax pledges to statehouses and lawmakers are encouraged to sign, imperiling votes to raise taxes to pay for public projects, particularly projects that could take years or even decades.

Michigan legislators last fall approved a $1.2 billion road-funding package after years of work and stalemates, largely over how much new revenue should be included. Some industry experts now look to examples of innovative solutions being tried in other states, such as fees tied to vehicle miles traveled and high-occupancy toll lanes, which can reduce traffic and wear and tear on roads.

“We had to let our roads literally crumble before we were willing to address some sort of funding increase,” said Mike Nystrom, executive vice president of the Michigan Infrastructure and Transportation Association, which represents road and underground contractors, and a member of Snyder’s task force.

“It takes a Flint situation before folks are willing to wake up and talk about really making the investment necessary to improve our infrastructure because they don’t want it to happen to them,” he added. “That’s been that way for a long time, where no one likes taxes, and they’re only willing to accept them once we’ve … dissolved all other possibilities.”

Ignoring a crumbling state

In 2009, the Michigan section of the ASCE released its first infrastructure report. The volunteer team, made up of professional engineers in both the private and public sectors, reviewed the state’s aviation program; dams; drinking water, storm and wastewater systems; energy; harbors and locks; roads and bridges; and transit.

The state’s infrastructure systems were ranked mediocre to poor, with an overall letter grade of D. The data are now 7 years old, though they illustrate numerous challenges:

• Aviation: Michigan will need to come up with more than $1.3 billion over five years to meet airport infrastructure needs.
• Dams: More than nine in 10 of Michigan’s 2,581 dams will meet their 50-year design life by 2020.
• Harbors and locks: The U.S. Army Corps of Engineers in 2008 projected funding needs of more than $16 million for Michigan’s harbors, $35 million for annual river maintenance and nearly $2.5 million per year for upkeep of the Soo Locks.
• Stormwater systems: No statewide management or inventory of Michigan stormwater systems exists, though the state and counties manage roughly 18,000 county drains. Systems without pumps or other mechanical operating devices often receive little attention, the group said, adding: “Consequently, in an operational sense, much of the storm drainage system is ignored until it fails.”

Michigan has improved slightly since then, said Chuck Hookham, a professional engineer who has sat on ASCE’s board of directors and helped write the 2009 report.

The society’s 2017 update should include more recommended solutions, Hookham said. The state has new challenges to contend with, he said, including development of another bridge to Canada, the ongoing controversy over an Enbridge Inc.-owned pipeline beneath the Straits of Mackinac and needed upgrades to the Soo Locks.

“You can call something a D forever and if nothing happens, that’s, I don’t think, beneficial to anyone,” Hookham said. “If we can show how we can change grades, I think that’s more appropriate.”

Michigan’s ability to improve its standing will depend in large part on how it addresses two major infrastructure systems ‒ roads and bridges, and drinking water.

In an April 2015 report, The Road Information Program, or TRIP, a Washington, D.C.-based research organization that focuses on surface transportation, cited data from the Michigan Transportation Asset Management Council showing that more Michigan roads are in poor condition ‒ 38 percent in 2014, up from 23 percent in 2006.

That figure is expected to climb to 53 percent by 2025 if funding levels stay the same, the report showed.
Bridge conditions aren’t much better, the TRIP report said. A full 12 percent of local- and state-maintained bridges were structurally deficient in 2014, meaning a bridge has major deterioration of the deck or structures. Another 16 percent are functionally obsolete and don’t meet current design standards.

If funding doesn’t change, 14 percent of Michigan’s bridges will be considered structurally deficient by 2023, according to TRIP.

The road-funding package Snyder signed last fall includes roughly $600 million in new revenue from higher gas taxes and vehicle registration fees, with the other half to be diverted from existing spending. The package includes the first fuel tax hike since 1997 and links it to inflation, but was criticized by advocates for more infrastructure funding because it won’t be fully phased in until 2021.

The package included a new Roads Innovation Fund, a lockbox of sorts that would set aside $100 million of the new roads revenue per year until the Legislature votes to release it. The Michigan Department of Transportation is required to look for new materials or processes to build roads that could cut half the cost of building to a 50-year life span ‒ even if those materials and processes cost more up front ‒ and have no roads in poor condition within 10 years.

MDOT typically builds roads that can last at least 30 years with routine maintenance, though many roads outlive that life expectancy, spokesman Jeff Cranson said.

The department estimated it would cost the state between $11 billion and $14 billion more per year for a decade to build roads that could last for 50 to 75 years, depending on the life span desired. The caveat: Spending $11 billion more annually on roads that last for 50 years would require a fuel tax of $1.70 per gallon, MDOT said.

And in April, the Michigan Infrastructure and Transportation Association released a report by Lansing-based Public Sector Consultants Inc., (of which The Center for Michigan, which operates Bridge Magazine, is a client) that showed an average of $447 million per year was spent on the state’s drinking water systems from 2004 to 2013.

The report suggests that to meet federal drinking water standards and ensure water is clean and safe, Michigan will need to spend between $731 million and $1 billion annually through 2030. The figures don’t reflect the Flint crisis.

“Flint isn’t the only place with aging water infrastructure and sewer infrastructure,” said Charles Ballard, an economist at Michigan State University.

“It’s a long-term challenge,” Ballard said. “I think the public understands that it’s a priority. But we saw from the roads situation last year that just because people want to do something, doesn’t mean that we have the political will to do very much.”

The Flint water crisis has helped focus attention on Michigan’s aging water and storm system infrastructure. (Bridge/Crain’s photo by Michael Lee II)

Finding the political will

For 20 years, the fraction of respondents who believed infrastructure was the state’s most urgent policy priority hovered around zero in MSU’s State of the State surveys. This year, 32.5 percent of survey respondents chose infrastructure. Only in the past few years did infrastructure become a separate survey choice, rather than being lumped into the “other” category.

Ballard attributes part of the public’s growing concern to Flint.

“Whether that will translate into better policies is not at all clear,” he said. “We didn’t ask, ‘OK, if that’s your top priority, are you willing to devote tax revenues to it?’ And I suspect at least some folks say that it’s a high priority, but that that would not translate into spending money on it. And if you don’t spend money on it, it won’t get fixed.”

It’s difficult to get a specific dollar figure for Michigan’s total spending on infrastructure.

Ballard, however, has calculated state and local taxes in Michigan as a share of personal income dating back to 1972. His analysis, citing census and other federal data, shows that Michigan residents paid about 9.5 percent of their personal income in taxes in 2012, down from more than 13 percent in the 1970s.

That’s not entirely due to tax rate cuts, he said, adding that the decline also is the result of erosion of the local and state tax base. The impact is magnified when combined with Michigan’s flat fuel tax, which has lost buying power over time, and property tax limits that don’t allow assessments to rise faster than inflation or 5 percent, whichever is less, and thus restrict how much revenue municipalities can bring in.

Michigan’s new road-funding laws raise the state’s 19-cent regular gasoline and 15-cent diesel fuel taxes to 26.3 cents per gallon starting in 2017, then link them to inflation.

But that increase won’t immediately erase years of tax cuts, Ballard said — a problem he said has worsened since the introduction of the “no-tax pledges” pitched to lawmakers.

“As long as we continue to send folks like that to the Legislature, that makes it challenging to deal with issues like this, because I just don’t see how we can fix the roads and the sewers and the water system for free,” Ballard said.

“What was important was cutting taxes, not dealing with those issues.”

Cities shortchanged

Lawmakers also have cut statutory revenue sharing to Michigan cities, which exacerbated local budget challenges particularly during the recession. A report released last week by Eaton Rapids-based Great Lakes Economic Consulting LLC ‒ run by Mitch Bean, a former director of the state’s House Fiscal Agency, and former state Treasurer Robert Kleine ‒ estimated municipalities cumulatively have lost more than $5.5 billion since 1998.

A House Republican leader paints a different scenario.

Aside from roads, “we've been able to increase local revenue sharing over each of the past five years, which goes a long way to help many of those issues,” said Gideon D’Assandro, a spokesman for House Speaker Kevin Cotter, (R-Mt.-Pleasant).

D’Assandro would not comment directly on how Cotter views the state’s role in funding infrastructure repairs, including Cotter’s thoughts about Snyder’s proposed statewide infrastructure fund, other than to say the legislature continues to work on the issue during budget talks.

Less money in the coffers leads to difficult decisions about services. For instance, the desire to cut costs is one factor in the Flint water emergency.

“The amount of money that was saved by … switching over to the Flint River looks to be tiny compared to what it will cost in terms of litigation and remediation,” Ballard said. “I don’t think the state will be able to walk away, assuming that there are children who suffer some long-term damage from being exposed to a neurotoxin. That’s going to cost money.”

Solutions

Several engineers and industry experts said user fees would be one way to solve Michigan’s underfunding problem. They could take the form of higher water rates, local millage requests or fuel tax increases.

Paying little or nothing now means paying a lot more later. TRIP, in its report, estimated that preventive road maintenance to keep roads in good condition would cost $85,000 per lane mile, compared with $1.6 million per lane mile for roads in poor condition that need to be rebuilt.

Updating all of Michigan’s roads to good condition would cost the state $14.1 billion, TRIP estimated.

The ballooning impact of delayed maintenance isn’t limited to roads. In 2009, ASCE recommended a 3-cent increase to Michigan’s current 3-cent-per-gallon aviation fuel tax, which hasn’t gone up since 1929, and encouraged the creation of a dedicated dam repair fund seeded with at least $50 million.

MDOT engineers are looking at ways to build longer-lasting roads. And the department will install the state’s first high-occupancy vehicle lanes when it rebuilds I-75 in metro Detroit, which are intended to reduce congestion by allowing vehicles with two or more passengers to use dedicated travel lanes during peak hours.

Motorists won’t have to pay tolls to use the lanes, though, and MDOT couldn’t charge them without first changing state law.

Pallasch, of ASCE, said high-occupancy toll lanes and fees charged per vehicle mile traveled ‒ the latter of which has been piloted in Oregon ‒ would shift costs to road users.

“We’re not setting aside enough resources to do it,” he said. “States and local governments and the federal government, frankly, they triage stuff. They do the best they can and they’re spending the limited resources they have in the best manner possible. And that means that not everything’s going to get done to the way the engineer or the (Department of Public Works) or the state (Department of Transportation) would like it to be done.

“Elected officials need to understand,” he added, “that not investing is really not an option.”