Study: Local tax changes could help fix Michigan’s roads

Local taxation may be the answer to “fixing the damn roads,” according to a new paper from the nonpartisan Citizens Research Council (CRC) of Michigan.

Democratic Gov. Gretchen Whitmer and the GOP-led Legislature have debated solutions at the state level, with the governor proposing in her Fiscal Year 2020 budget a 45-cent gas tax hike to raise $2.5 billion more annually for roads. Republicans have rejected the idea. The budget deadline is Sept. 30.

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The CRC says that one solution could be allowing currently hamstrung local units of government to tax residents for roads they take every day. People would be taxed for the roads they regularly use, rather than paying taxes and not necessarily seeing their funds go to infrastructure in their area.

“Rather than moving from one problem to the next,” said Eric Lupher, president of the Livonia-based Citizens Research Council, “we are thinking about addressing multiple issues. While the roads need to be fixed and some of that will be addressed with new revenues, it is also necessary to address Michigan’s overburdened property tax system and the problems inherent in collecting the majority of revenues at the state level and sharing them with local governments.”

Right now, the main avenue to increase road funding for the more than 120,000 miles of roads in Michigan, many of which are in rough shape, is to increase property taxes, the CRC said. This system fails to address all the services to repair the roadways that are necessary.

By localizing road maintenance and repair funding, local municipalities would have the power to collect funds in a way that best suits their residents, the CRC argues. To do so, the Legislature would need to pass a law authorizing more local options. Creating local sales-tax options requires an amendment to the state Constitution. Voter approval is required to authorize local taxation. 

“Alternative taxes could provide property tax relief, lessen the need for state taxes to yield revenues sufficient for both the state and local road systems, and provide resources to mend the local road systems that are heavily traveled as part of our everyday lives,” Lupher said.