Time for toll roads in Michigan? Lawmakers revive debate

• Michigan budget committee debates road funding alternatives, including toll roads and mileage-based fees
• Experts say Michigan roads are underfunded by $4 billion per year
• New state budget could include money for pilot studies exploring new revenue sources

LANSING — As the projected price for fixing Michigan’s crumbling roads and bridges grows, lawmakers are reviving debates over charging drivers by the mile or adding tolls to some of the state’s busiest highways. 

A state House budget committee over the past two weeks has invited testimony from advocates of alternative road funding options, including authors of a $1 billion toll road proposal. 

The state doesn’t have the resources to fix what experts say is a nearly $4 billion annual gap, but the Legislature could fund additional studies or pilot programs to help people “get more comfortable” with the idea of new revenue sources, Rep. Ranjeev Puri, a Canton Democrat who chairs the House Appropriations transportation subcommittee.

Related:

• 0HCRAP, Michigan bans 25K license plates for being 2DAMH0T
• West Michigan officials expanding use of wrong-way detectors to save lives
• New toll system should cut wait times at Michigan bridges to Ontario

“I don't think it's going to be anything that we drastically change overnight,” Puri told Bridge Michigan this week. 

“We have a revenue issue, and we need to find new money…the harsh reality is that we can't just bury our heads in the sand.” 

With electric vehicles beginning to cut into gas tax revenues, industry experts estimate Michigan officials need to spend up to $3.9 billion more per year to fully fund the state’s infrastructure needs, even when taking current spending and federal funding into account. 

For local roads and bridges alone, the County Road Association last month found the state is $2.4 billion short of fully funding maintenance and necessary repairs.

“The longer we wait, this deficit is just going to get bigger and bigger,” Puri said. 

Finding a long-term solution to pay for road and bridge repairs could be a crucial part of attracting and retaining Michigan residents as officials work to reverse stagnant population trends. 

Gov. Gretchen Whitmer’s population growth council in December urged policymakers to consider new options, including “vehicle miles traveled fees, tolling, and better utilization of public-private partnerships.” 

“Ensuring businesses and residents feel confident investing in a future in our state requires safe roads, accessible transit, and water systems that deliver clean water and flood protection,” the bipartisan Growing Michigan Together Council said in its recommendation report. 

How tolling could work in Michigan

The transportation budget subcommittee this week pored over a recent study that projects Michigan could generate up to $1 billion a year by setting up tolling on heavily-traveled highways. 

Michigan currently has tolls in place in certain tunnels and bridges, but not on any roads. The study, ordered by lawmakers in 2020, determined 14 of Michigan’s 31 highways could theoretically support tolling, including large portions of Interstates 75, 94 and 96.

Ron Davis, a project manager with HNTB, the firm that conducted the tolling study, told lawmakers this week that a 6 cent-per-mile toll on passenger cars and additional charges for trucks could eventually sustain the costs of a toll system in Michigan, freeing up existing funding sources for other uses and offset projected declines in traditional gas taxes. 

“When you look at some of our most valuable road and bridge assets and how we're going to address those needs, the potential to set up that dedicated funding stream for them is quite compelling,” Davis said. 

Any tolling program would take years to get off the ground in Michigan. The study proposed beginning with parts of I-94 and then continuing over five years on all or parts of I-69, I-75, I-196, I-275, I-696, and M-14.

What it would take

If Michigan officials were to seriously consider tolling, they’d have to clear hurdles at the federal level in addition to selling the concept to Michigan motorists. 

States have historically been prohibited from implementing tolls on highways that were built using federal money, although a series of new federal laws and pilot programs have relaxed the rules. 

Several states have studied the possibility of leveraging federal programs to put tolls on existing roads, but none thus far have used them to implement a statewide tolling system.

Before expecting drivers to pay for the privilege of driving on a roadway, Davis said, an initial investment would be required to bring the roads into peak condition and keep them fully maintained, typically paid for by taking out bonds against future revenue.  

“When you're paying a toll as a driver, you do expect a better user experience,” Davis said. 

Some lawmakers were concerned that the state would need to spend money upfront on toll roads, only to make Michigan drivers pay more to use them.

“It's almost like rubbing it in your face,” said Rep. Donni Steele, R-Orion Township, who called the prospect of tolling unfair for drivers who already pay taxes in the system and still don’t have quality roads. 

Tolling remains a controversial prospect among drivers, particularly in the trucking industry, who would likely be subject to higher costs per mile due to the heavier weights they carry on the roads.  

Other options 

Puri said tolling is part of a “buffet of options” lawmakers are considering to address the rising costs of fixing the roads — especially as the state’s most reliable road funding mechanism faces an uncertain future.

One of the largest sources of funding for Michigan road repairs is a 27.2 cents-per-gallon tax on gasoline and diesel fuel drivers pay at the pump. The state has the seventh-highest per-gallon tax in the country, in part because the 6 percent sales tax applies on top of the fuel tax.

Baruch Feigenbaum, senior managing director of transportation policy for the Reason Foundation, told lawmakers the fuel tax is akin to “a rockstar on his farewell tour” as increased fuel efficiency and alternatives like hybrids and electric vehicles mean less revenue coming back to the state. 

One proposal already being tested in several other states is a mileage-based user fee that would charge motorists depending on how much they use the roads. 

A comprehensive pilot study to determine how the concept would work in Michigan, particularly to calculate different impacts such a change would have on urban and rural residents, would cost between $4 and $5 million, Feigenbaum said. 

The push for a mileage-based tax system is complicated by privacy concerns about placing GPS data collection devices in residents’ vehicles.

A 2023 study by the Michigan Infrastructure and Transportation Association explored potential remedies to make up the funding gap, including:

• Raising the gas tax by 39 cents per gallon to 74 cents per gallon
• Increasing the sales tax by 2 percent to 3 percent to fix roads, which would require a constitutional amendment 
• Implementing a tax of 3 cents to 5 cents per mile for every vehicle mile traveled

State gas taxes and registration fees increased slightly under a road funding plan signed by Snyder in 2015. A 2019 bonding program initiated by Gov. Gretchen Whitmer raised $3.5 billion for highways. 

But other efforts to raise more money in the last decade haven’t been politically popular.

A 2015 ballot initiative to raise new revenue for roads was walloped at the ballot box, and a 2019 proposal by Whitmer to raise the gas tax by 45 cents per gallon was panned by lawmakers and never advanced. 

"It's obvious, we need to look at all options for funding our roads going forward," state Rep. Ken Borton, R-Gaylord, said during committee deliberations. 

But in a state comprised of peninsulas, toll roads may not make sense, he said.

"If we put these toll roads where they're being suggested, it's going to be on the backs of our residents here in Michigan, and we won't be really collecting that much from people just passing through."