In last month’s column we briefly covered where property taxes go. This week we will cover transportation taxes and how they are used to maintain our highway and road system. Just remember those potholes.
Many can’t understand how we could have such shortfalls in our funding mechanism from the State. For years funding was able to keep up with needs but in the last 25 years this has steadily reversed due to vehicles which are more fuel efficient(using less fuel) and inflation.
Let’s go back in time to 2004 and compare to 2011 the latest full year analysis was done for transportation funds. This is condensed to keep it simple. In 2004 Gasoline tax collections totaled $929,889,000 and vehicle registration collections totaled $866,580,000. Let’s run the clock forward and find in 2011 gasoline tax collections totaled $831,298,000 while vehicle registrations totaled $863,632,000. This is a reduction in overall revenue of over 5%, this same time period saw inflation increase by 19%.(its actually much higher but we are using BLS standards)
One can now bring into focus that the combination yields a direct reduction in available revenues coupled with inflation, therefore the shortfall of funds. Put another way, we reduce available resources (money), also reduce the power of the dollar so less miles of maintenance can be funded. This phenomenon is also why at every level of government there is a need to increase your taxes, in simple terms, the dollar is worth less so government needs more of them. You will continually see our references to the ravages of inflation, this is a sinister tax on all levels of consumption, it touches everyone.
Let’s see how the State of Michigan distributes the funds, we’ll keep this simple and rounded off as well. If there is one Public Act you need to remember it’s PA 51, this is the State Road Fund Distribution method used for over 60 years in Michigan. As illustrated above, the main sources of revenue under this act are vehicle registrations and fuel taxes. Looking at the allocation percentage each dollar funneled through PA 51 is distributed as follows: 39.1% Local Roads, 39.1% State Roads, 21.8% Cities and Villages. However, these allocations are reduced further by statutory adjustments for funds like, recreation, local program, debt service, bridges, economic development funds, etc.
According to the County Road Association of Michigan the effective percentages are State Roads 35.8%, Counties 35.3% Cities and Villages 20%, Comprehensive Transportation Fund 8.8%. In addition, the 39.1%(effectively 35.3%) distributed to Local Roads is further divided among Counties by a calculation based upon miles of State Roadways, Local Roadways and population or per capita distribution. There are a few Counties in the Southeastern portion of the State which receives the lion’s share of PA 51 funds, this is due to population and road density. Here is the contrast in dollars and cents, recently the State allocated $217 million dollars from surplus to roads. The first $100 million divided under the allocation netted Clare County approximately $230,000, the same formula yielded Oakland County $60 million.
In my discussions with State Representative Joel Johnson, Senators Judy Emmons and Darwin Booher, it is NOT in Northern Michigan’s best interests to propose attempts to change the formula, why? The danger is in negotiations and legislative maneuvering we could likely see less than the 39.1% we now are part of and the division of funds calculations will likely lead to less for the less populated Counties.
Much of the information presented here is from the Citizens Research Council of Michigan and the County Road Association of Michigan, these are wonderful resources full of figures and information.
Our next column will detail what Grant Township and its residents can do to save our present road infrastructure. It’s not a pretty picture but we’ll still hang it on the wall for everyone to see.
“Problems are solutions in work clothes”