As shutdown looms, road funding a $3B sticking point in Michigan budget talks

Senate Democrats Wednesday said it’s a lack of in-person negotiations, not a roads plan from their chamber, tying up a state budget agreement
While Dems passed their version of a budget in May, a top House official said Tuesday their full budget may not drop until after Labor Day
Gov. Gretchen Whitmer told reporters last week that no budget agreement could be reached without a deal to fix Michigan’s roads, too

LANSING — With just six weeks left to avoid a state government shutdown by striking a budget deal, Michigan lawmakers have yet to negotiate a key sticking point: How and if to include $3 billion in annual road funding sought by Democratic Gov. Gretchen Whitmer and House Republicans.

Top Senate Democrats, who in May approved a budget without that additional road funding, said Wednesday there’s “no reason” why the Legislature can’t do both — but also told reporters the upper chamber is unlikely to propose its own road funding plan anytime soon.

“You don’t need to have five, six different plans,” Senate Majority Floor Leader Sam Singh, D-East Lansing, said during a press conference in Lansing. “You need to be in the room and having … negotiations.”

That appeared to be a dig at House Speaker Matt Hall, R-Richland Township, who has not spoken in more than a month with Senate Majority Leader Winnie Brinks, D-Grand Rapids, according to Brinks. Hall has disputed the claim.

Whitmer and House Republicans released separate road funding plans earlier this year, each calling for at least $3 billion in additional yearly funding to rebuild or maintain the state’s aging infrastructure.

Both plans seek to ensure all taxes paid at the gas pump go to roads — currently, sales tax on fuel does not — but they diverge from there. Whitmer’s plan would rely on other tax increases, including on marijuana, while the House GOP plan would require broad but unspecified spending cuts.

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Senate Democrats, meanwhile, continue to say they’re having “conversations” about potential road funding sources but maintain it must not come at the expense of other budget priorities, like funding for K-12 schools.

House Republicans, who have not yet introduced a full budget proposal, “are obstructing the legislative process, stalling the critical passage of the state budget and pushing us toward a point of irreparable harm,” Brinks argued Wednesday, “all in a shameful attempt to score some political points.”

No roads, no budget?

With less than two months until Oct. 1, the constitutional deadline for passing Michigan’s budget without a government shutdown, the Whitmer administration is urging lawmakers to come to the table and agree on a road funding plan.

State transportation officials this week warned that more than 100 bridges will close by 2035 and the state could lose about 2,800 workers in the construction field by 2026 absent additional funding.

Whitmer has long sought a road funding deal after promising to “fix the damn” roads as part of her 2018 campaign. Lawmakers never acted on her 2019 proposal for a 45-cent per-gallon fuel tax hike, so she instead borrowed money through a $3.5 billion bond program.

Michigan is spending the most it has on roads in decades, but costs have risen too. The state’s Transportation Asset Management Council forecasts road quality will deteriorate again once the one-time bond funding runs out.

“At this rate, by decade’s end, nearly 50 percent of state routes, which carry 53 percent of total traffic and 80 percent of commercial traffic, will be in poor condition,” MDOT Director Bradley Wieferich said in a statement. “Without additional investment, those projections will get worse.”

Whitmer did not include road funding in the $83.5 billion budget she proposed in February but said last week that the “budget’s not done unless roads are done, too,” according to Gongwer News Service.

Whitmer spokesperson Stacey LaRouche echoed that sentiment in a Wednesday statement, telling Bridge Michigan that the governor “remains committed to signing a fully negotiated, bipartisan budget that funds schools, roads, local governments and other critical services Michiganders rely on.”

LaRouche added that Whitmer has held meetings with Brinks, Hall “and other key decision-makers in the Legislature each week since July 1, with our teams talking almost daily to move forward on a budget.”

Funding expectations

Brinks told reporters Wednesday she saw “no reason why we can’t get a roads plan and a responsible budget done” but that she refuses to “make the choice between funding schools and funding roads.”

New polling suggests Michigan voters don’t like that choice either.

Winnie Brinks stands next to Mall Hall. — Senate Majority Leader Winnie Brinks, D-Grand Rapids, said last week she’d not spoken with House Speaker Matt Hall, R-Richland Township, in roughly a month amid tense state budget and road funding negotiations. (Simon Schuster/Bridge Michigan)

When asked to choose between funding public schools or roads in this year’s state budget, 74% of respondents picked schools, according to an Aug. 8-11 survey of 600 likely voters conducted by Glengariff Group Inc. of Lansing and commissioned by the K-12 Alliance of Michigan.

“The people of Michigan should be able to expect us to fund all of the fundamental things that the state government is responsible for,” Brinks said, adding that Senate Democrats have “consistently stated” a roads plan and budget must pass the Legislature in tandem.

As approved by the lower chamber in March, House Republicans’ $3.1 billion roads plan entails:

Replacing the 6% sales tax on gasoline with an inflation-pegged 20-cents-per-gallon increase in the motor fuel tax, an increase that would be directly sent to roads and equals about $1 billion per year.
Earmarking $2 billion a year from the corporate income tax to roads, with 90% going to local agencies. That would grow to $2.2 billion after 2030.
Ending funding for economic development programs Whitmer has championed, including $550 million for the Strategic Outreach Attraction Reserve Fund.
Effectively pushing recipients of Michigan Economic Growth Authority tax credits away from the subsidies by increasing the tax rate they’d pay under them to 30%.
While the plan would generate more than $3 billion for roads, it would decrease general fund revenue by a similar amount, which would force lawmakers to consider cutting other spending.

Most Democrats voted against the House roads plan in March, arguing it would force steep cuts elsewhere and that the impact on schools — which receive a portion of sales tax revenue – is not fully known. In the months since, House Republicans have not yet proposed a full budget.

Hall, who has blamed Senate Democrats for stalled budget negotiations, said Tuesday that House Republicans may not introduce a full budget until after Labor Day, not “next week,” as indicated earlier in the day by House Appropriations Committee Chair Ann Bollin, R-Brighton.

Singh, the state Senate’s majority floor leader, said Wednesday that legislative Democrats like “some elements” of the governor’s road funding plan but dislike other elements. He didn’t specify what parts, but again emphasized the need to “have everyone in the same room” for negotiations.

“We’ve said that we’re willing to negotiate … but we have to do it within the context of the budget,” Singh said, adding that “by not having people in the room, having that conversation — not having a full budget — you can’t talk about all these pieces together.”