Opinion | Bigger ideas needed to really fix Michigan’s damn roads

Michigan’s 2025 legislative session has kicked off with a familiar theme: “Fix the damn roads.” While both Gov. Gretchen Whitmer and House Speaker Matt Hall have identified road funding as a legislative priority, neither appears interested in improving road funding policy nor has either identified specific details about where increased road investments would come from or how to generate new funds.

Public Act 51 of 1951, the state law governing the annual distribution of $3.9 billion of earmarked transportation revenue, is terribly inefficient at directing those dollars to where they are most needed. So, why hasn’t updating and improving this key law been a legislative priority?  

First, very few people understand Michigan’s road funding law. Act 51 has been amended dozens of times, resulting in myriad special funds, carve-outs, and redistributions. Michigan’s road funding law is now so complicated that it is practically impossible to understand or audit… or fix.

Act 51 is predicated on 74-year-old priorities. It should be repealed and replaced with a funding law that reflects current priorities and makes the best use of available data and technology. Yet, such an approach requires politically fraught conversations about priorities and trade-offs.

This brings us to the main reason that reform is not a priority: A rational funding system that distributes resources based on need is so unlike our current system that it is difficult to envision. Road agencies fear that change might decrease their funding. Thus, most road interests have collectively labeled funding policy reform as a “distraction.” As such, nearly all policy discussions center around increasing road funding without aiming to use it better.

Michigan’s road construction industry has asserted a “need” for an additional $4 billion in annual road funding, about doubling current state funding. Addressing this need with new revenue would require about $1,000 more per year from each household.

The only alternative to raising taxes is to repurpose the revenue the state already has. Speaker Hall’s proposal does just that by shifting revenue from the Corporate Income Tax (CIT) and the current sales tax on motor fuel to roads. We noted in December, however, that such an approach would require major cuts to the state budget. Adjusting for the recent upgrade in state revenue estimates, his plan would still require over $2 billion in other cuts — most likely to discretionary General Fund/General Purpose (GF/GP) appropriations.

A recent Senate Fiscal Agency (SFA) analysis suggests GF/GP revenue for fiscal year 2026 will exceed the amount needed to maintain currently funded programs by around $435 million. Unless the Legislature is willing to make statutory changes to tap into a separate $1 billion revenue surplus in the state’s School Aid Fund (something Speaker Hall appears to have taken off the table), this is the amount available to shift into road work without forcing any budget cutting or revenue enhancements.

Hall’s plan points to enhanced state revenues, expiring CIT earmarks, and savings from ending the practice of putting large legislative earmarks in the annual budget as sources to help pay for his road proposal. Critically, though, all of these factors are already built into the SFA’s assumptions in arriving at the $435 million GF/GP revenue surplus. 

Gov. Whitmer has also signaled she is open to redirecting state revenue for road repairs. Whatever the final compromise, lawmakers will need to be cognizant of the budget tradeoffs that come with it.

The Constitution appropriately gives the Legislature control over the state’s purse strings, so it has the authority to reduce the budget by any amount.  But responsible budget cuts of this magnitude would call for the evaluation and wholesale elimination of current state programs, facilities, and services.  Picking at the budget with “across the board” type cuts affecting almost all areas of government would be an abdication of its responsibility.

Policymakers should critically evaluate how available resources are used. Despite conventional wisdom that Michigan’s roads have been “historically underfunded,” our research concludes that Michigan ranks 30^th in road funding. Furthermore, despite conventional wisdom that Michigan has some of the worst roads, we found that Michigan ranks 40^th – not great, but not last. Other states, including several peer states, appear to be achieving better results with similar investment levels. This reality does not get the attention it should when policymakers take on this important issue. 

Much of the reason that Michigan’s roads are perceived as so bad is that the worst roads tend to be located on high-traffic routes in dense population centers. Michigan’s roads aren’t terribly bad statewide, but the roads that people actually drive are often some of the worst. This directly reflects a discrepancy in funding allocation and funding need, and this is largely governed by Act 51.

If we don’t address fundamental deficiencies in Michigan road funding policy, we will just be throwing more taxpayer dollars into a broken system. Reform will be difficult but necessary. Otherwise, we can expect to continue having these conversations for decades to come.