Michigan’s roadways and bridges are a critical issue for residents and the state’s economy. Consistently ranked as a top concern for Michigan voters in polls dating back to 2014, the condition of these vital arteries directly impacts daily life and commerce. Roads are the lifelines of Michigan’s economy, facilitating the movement of approximately $860 billion in freight annually. Furthermore, Michigan serves as a crucial trade corridor, with 38% of the half-trillion-dollar trade volume between the U.S. and Canada flowing through the state. Understanding the intricacies of Michigan’s road conditions, and the efforts to maintain them, is paramount for residents and stakeholders alike.
This article delves into the current state of Michigan’s roads and bridges, examining the factors that influence their condition and the financial mechanisms in place to support their upkeep. We will explore the evaluation methods used to assess road quality, analyze the conditions across different road types, and discuss the funding structures managed by entities like the Michigan Department of Transportation (MDOT). By understanding these elements, we gain a clearer picture of the challenges and potential solutions for ensuring safe and efficient transportation infrastructure in Michigan.
Evaluating Michigan’s Road and Bridge Quality
Before examining the specific conditions, it’s important to understand how road and bridge quality is measured in Michigan. Two primary systems are used: the Pavement Surface Evaluation and Rating (PASER) system for roads and the National Bridge Inventory (NBI) Rating Scale for bridges.
PASER System for Roads
Developed by the University of Wisconsin Transportation Information Center, the PASER system provides a standardized method for evaluating road conditions. Trained observers assess roads and assign a ranking on a scale of 1 to 10, with 10 being excellent and 1 being failed. Graphic 1 details the PASER rankings:
Graphic 1: PASER Rankings
| Ranking | Condition | Appearance | Maintenance Needed |
|---|---|---|---|
| 9-10 | Excellent | Like new | None |
| 8 | Very Good | No longitudinal cracks, all cracks sealed or tight | Little or no maintenance required |
| 6-7 | Good | Minor cracks and traffic wear | Routine maintenance such as crack filling and sealcoating |
| 4-5 | Fair | Larger cracks, loss of surface asphalt and noticeable wear on the asphalt | Patching and surface overlay |
| 3 | Poor | Substantial cracking, patches in poor condition, potholes and surface distortion | Mill and resurface or total reconstruction |
| 2 | Very Poor | Severe cracking and distortion, numerous potholes with patches in poor condition | Total reconstruction with extensive repair to the road’s base |
| 1 | Failed | Extensive loss of road’s integrity | Road needs to be rebuilt from scratch |
To simplify reporting, the Michigan Transportation Asset Management Council (TAMC)—a group advising Michigan’s road agencies—condenses PASER ratings into three broader categories: “poor” (ratings 1-4), “fair” (5-7), and “good” (8-10). These categories help agencies determine the necessary maintenance levels, ranging from routine upkeep for “good” roads to structural improvements for those in “poor” condition.
National Bridge Inventory (NBI) Rating Scale for Bridges
Bridges in Michigan are evaluated using the NBI Rating Scale, established by the Federal Highway Administration. This scale rates bridges from 0 to 9, assessing three key elements: the deck, superstructure, and substructure. The overall bridge rating is based on the lowest score among these elements. Graphic 2 summarizes the NBI scale:
Graphic 2: National Bridge Inventory Rating Scale
| Rating | Condition | Appearance |
|---|---|---|
| 9 | Excellent | No problems noted. |
| 8 | Very Good | No problems noted. |
| 7 | Good | Some minor problems. |
| 6 | Satisfactory | Structural elements show minor deterioration. |
| 5 | Fair | All primary structural elements are sound but may have minor corrosion, cracking or chipping. May include minor erosion on bridge piers. |
| 4 | Poor | Advanced corrosion, deterioration, cracking and chipping. Also significant erosion of concrete bridge piers. |
| 3 | Serious | Corrosion, deterioration, cracking and chipping, or erosion of concrete bridge piers have seriously affected deck, superstructure, or substructure. Local failures are possible. |
| 2 | Critical | Advanced deterioration of deck, superstructure, or substructure. May have cracks in steel or concrete, or erosion may have removed substructure support. It may be necessary to close the bridge until corrective action is taken. |
| 1 | Imminent Failure | Major deterioration or corrosion in deck, superstructure, or substructure, or obvious vertical or horizontal movement affecting structure stability. Bridge is closed to traffic but corrective action may put back in light service. |
| 0 | Failed | Out of service, beyond corrective action |
Similar to road ratings, TAMC groups bridge ratings into “poor” (0-4), “fair” (5-6), and “good” (7-9) categories for reporting and management purposes.
Current Conditions of Michigan’s Roadways and Bridges
Michigan’s roads are broadly classified into trunkline and nontrunkline roads. Trunkline roads, identified by “I,” “US,” or “M” designations, are state roads overseen by the Michigan Department of Transportation (MDOT). While comprising only 8% of Michigan’s road mileage, trunklines carry a substantial 53% of passenger traffic and about 70% of truck traffic, underscoring their critical importance to the state’s transportation network.
State Trunkline Roads and Bridges
Trunkline roads, totaling 9,668 centerline miles, equate to approximately 30,000 lane-miles. MDOT is responsible for the construction and maintenance of these vital roadways. Graphic 3 provides a snapshot of the condition of Michigan’s trunkline roads in 2017:
Graphic 3: Condition of Michigan’s State Trunkline Roads, 2017
In 2017, 23% of trunkline lane-miles were rated as “good,” 52% as “fair,” and 25% as “poor.” While a significant 75% were in fair or good condition, MDOT projections indicated a concerning trend of worsening conditions in the near future. MDOT’s “remaining service life” (RSL) forecast, which estimates how long a road will last before needing major rehabilitation, painted a concerning picture. While 85% of trunkline lane-miles were projected to have an RSL of three years or more in 2018, this figure was expected to plummet to just one-third by 2024. This projection implies that a staggering two-thirds of trunkline roads would fall into the “poor” category by 2024, necessitating costly reconstruction. MDOT estimated that trunkline pavement condition peaked in 2008, with a continuous decline of 7% of trunkline miles (2,000 lane-miles) deteriorating into “poor” condition annually until only one-third remained in fair or good condition.
Michigan’s trunkline bridge system, consisting of approximately 4,500 bridges, presented a slightly better picture in 2017, as shown in Graphic 4:
Graphic 4: Condition of Michigan’s State Trunkline Bridges, 2017
In 2017, 30% of trunkline bridges were rated “good,” 65% “fair,” and only 5% “poor.” While trunkline bridges were also projected to deteriorate, the decline was expected to be more gradual than for roads, with nearly 93% still anticipated to be in fair or good condition by 2024.
County Roads and Bridges
Nontrunkline roads fall under the purview of county road commissions. County roads are further classified as primary or local, based on their importance as determined by the county road commission and approved by the State Transportation Commission. Primary county roads can extend into city and village limits, and township roads also fall under county road commission jurisdiction.
Primary county roads are classified as “federal-aid roads,” making them eligible for federal funding for repairs and reconstruction. Approximately one-third of Michigan’s roads are federal-aid eligible. Local county roads, on the other hand, are “non-federal-aid roads.” Data collection on pavement conditions is mandatory for federal-aid roads but less comprehensive for non-federal-aid roads. Michigan has approximately 90,000 centerline miles of county roads and 5,800 county bridges.
Graphic 5 reveals the condition of federal-aid county roads in 2017:
Graphic 5: Condition of Michigan’s Federal-Aid County Roads, 2017
In 2017, nearly half (48%) of federal-aid county road lane-miles (approximately 48,000 lane miles) were in “poor” condition, 34% were “fair,” and only 18% were “good.” The condition of county roads was significantly worse than that of state trunklines.
County bridges presented a more favorable picture, as shown in Graphic 6:
Graphic 6: Condition of Michigan’s Federal-Aid County Bridges, 2017
Nearly half (47%) of federal-aid county bridges were rated “good,” 38% “fair,” and 15% “poor” in 2017. County bridges were in better condition compared to county roads, but still lagging behind state trunkline bridges in overall quality.
City and Village Roads
Roads within cities and villages, excluding those under county road commission jurisdiction, are maintained by the respective municipality. City or village councils designate “major streets,” subject to State Transportation Commission approval. Michigan has approximately 21,400 centerline miles of city and village roads. Major streets are federal-aid eligible, while local streets are not. Federal-aid city and village roads comprise about 4,400 centerline miles, or 11,000 lane miles.
The condition of federal-aid city and village roads closely mirrored that of county roads. Graphic 7 illustrates the condition in 2017:
Graphic 7: Condition of Michigan Federal-Aid City and Village Roads, 2017
In 2017, 46% of federal-aid city and village roads were in “poor” condition, and only 17% were “good,” highlighting a significant need for improvement.
City and village bridges showed similar conditions to county bridges. Graphic 8 details their condition in 2017:
Graphic 8: Condition of Michigan Federal-Aid City and Village Bridges, 2017
In 2017, 46% of city and village bridges were rated “good,” and only 10% were “poor,” indicating a relatively better condition compared to roads but still areas for potential improvement.
Graphic 9 summarizes the conditions of federal-aid roads and bridges across different road types in 2017:
Graphic 9: Summary of Michigan Federal-Aid Road and Bridge Conditions, 2017
| Roads | ||||
|---|---|---|---|---|
| Road Type | Centerline Miles | Lane Miles | Good | Fair |
| Trunkline | 13,006 | 30,000 | 23% | 52% |
| County | 22,642 | 48,000 | 18% | 34% |
| City/Village | 4,398 | 11,000 | 17% | 37% |
| Total | 40,046 | 88,000 | 20% | 40% |
| Bridges | ||||
|---|---|---|---|---|
| Road Type | Number | Good | Fair | Poor |
| Trunkline | 4,500 | 30% | 65% | 5% |
| County | 5,800 | 47% | 38% | 15% |
| City/Village | 900 | 46% | 44% | 10% |
| Total | 11,200 | 40% | 49% | 11% |
Non-Federal-Aid Roads
Local roads, not eligible for federal aid and maintained by counties, cities, and villages, constitute approximately 165,000 lane miles. These include subdivision streets in townships and neighborhood streets in cities and villages. Data collection on these roads is not mandatory, resulting in limited information. In 2017, TAMC had data from only 125 local government agencies, covering 9,239 lane miles (about 6% of the total). Graphic 10 illustrates the condition of these roads:
Graphic 10: Condition of Michigan Non-Federal-Aid Roads, 2017
Over a third of these non-federal-aid roads were in “poor” condition. Despite the limited sample size, TAMC suggests that the condition of non-federal-aid roads is likely worse than that of federal-aid roads due to funding priorities and maintenance schedules.
Michigan Road Funding Mechanisms
Road funding in Michigan comes from various sources, including federal, state, and local levels. Federal funding originates from the Federal Highway Administration’s Highway Trust Fund, supported by federal gasoline and diesel taxes. State funding primarily derives from state fuel taxes, vehicle registration fees, income taxes, and legislative appropriations. Local governments also contribute through road millages, general tax revenue, and special assessment districts. Public Act 51 of 1951 (“Act 51”) governs the allocation and expenditure of state revenue for roads and bridges, dividing funds between state roads and local government needs.
Federal Road Funding
The federal Highway Trust Fund is mainly funded by an 18.4 cents-per-gallon federal gasoline tax and a 24.4 cents-per-gallon diesel tax. These funds are available for federal-aid-eligible highway projects, typically covering 80% of project costs and requiring state or local matching funds. Federal funds cannot be used for routine maintenance.
Contrary to common perception, Michigan is not a “donor state” to the Highway Trust Fund. Data from 2014 indicated that Michigan had been receiving more federal highway funding than it contributed in federal fuel taxes since 2003. For instance, in 2012, Michigan contributed $1.01 billion to the fund but received $1.05 billion. Federal funding constitutes slightly under 30% of MDOT’s budget, with MDOT receiving 75% of Michigan’s federal road funding, while county road commissions and cities/villages share the remaining 25%.
State Fuel Taxes and Vehicle Registration Fees
The Michigan Transportation Fund (MTF) is primarily fueled by state-level sources: Michigan’s 26.3 cents-per-gallon gasoline and diesel taxes and vehicle registration fees. Revenue from the MTF is distributed to MDOT, county road commissions, and cities/villages. In 2017, vehicle registration fees contributed $1.2 billion, fuel taxes $1.4 billion, and vehicle title fees $40 million to the MTF.
Michigan’s fuel taxes, initially set in 1997 at 19 cents per gallon for gasoline and 15 cents per gallon for diesel (and not indexed to inflation), were increased in 2017 to 26.3 cents per gallon and are set to be indexed to inflation starting in 2022. Vehicle registration fees also increased by an average of 20% in 2017.
While Michigan levies a 6% sales tax on fuel, nearly all of this revenue is dedicated to public schools and local governments, not road funding. To address revenue loss from fuel-efficient vehicles, electric vehicles are assessed a $100 annual surcharge, and hybrid vehicles a $30 surcharge.
Gasoline taxes for passenger cars are collected at the pump. Diesel taxes for interstate trucks operate under the International Fuel Tax Agreement (IFTA). Truck drivers log miles driven in each jurisdiction, calculate fuel consumption for Michigan miles, and pay Michigan diesel tax and sales tax accordingly.
Passenger car registration fees are based on vehicle age and base price. Commercial truck registration fees are based on gross vehicle weight (GVW), ranging from $590 annually for 24,000-pound trucks to $3,741 for trucks over 160,000 pounds. Exceptions exist, such as reduced rates for moving vans and carnival trucks (80% of usual rate). Farm, milk, and logging trucks also pay significantly reduced registration fees, calculated at 74 cents per 100 pounds of tractor/empty truck weight, costing the MTF an estimated $40 million annually. Approximately one-third of commercial trucks in Michigan utilize this reduced fee structure. In some cases, these reduced fees can be lower than typical passenger car registration fees.
Michigan’s truck weight restriction laws, which use axle load restrictions instead of the federal GVW limit, allow heavier trucks (up to 164,000 pounds) than most states. While MDOT argues this reduces truck traffic and business costs and that heavier trucks cause less damage per unit of cargo than more numerous lighter trucks, the economic impact and fairness of truck user fees relative to road damage remain debated. As will be discussed later, evidence suggests that current truck fuel taxes and registration fees do not fully cover the pavement damage costs caused by these vehicles.
Distribution of Michigan Transportation Fund Revenue
MTF revenue is distributed among various state and local government entities, including MDOT, county road commissions, cities, villages, and townships.
Michigan Department of Transportation (MDOT)
In fiscal year 2017, Michigan vehicle registration fees and fuel taxes generated approximately $2.6 billion in MTF revenue. After deductions for administrative overhead (primarily Secretary of State operations – $20 million), allocations to the Economic Development Fund and Recreation Improvement Fund ($63 million), and administrative grants/debt service ($154 million), approximately $2.3 billion remained for distribution to MDOT and local governments for road and bridge maintenance and repair.
The Economic Development Fund, created by Act 51, supports transportation improvements linked to private investment and job creation. Eligible projects fall into categories like targeted industry development, urban traffic congestion reduction, rural all-season road networks, commercial forest development, and urban areas in rural counties. In fiscal year 2017, approximately $41 million in MTF revenue was allocated to this fund.
Two percent of gas tax revenue is directed to the DNR’s Recreation Improvement Fund, representing fuel taxes from off-road vehicles and motorboats. This fund, combined with the Michigan State Waterway Fund, supports recreation trails, land restoration, inland lake cleanup, and harbor/dock infrastructure.
Another 10% of the MTF is earmarked for the Comprehensive Transportation Fund, supporting public transportation throughout the state. In fiscal year 2018, nearly $250 million was disbursed from the MTF for local transit agencies via formula-based allocations.
The remaining $2.3 billion in the MTF is distributed as follows: 39.1% to MDOT for the state trunkline fund, 39.1% to county road commissions, and 21.8% to cities and villages. One percent of the county road commission allocation is set aside for snow removal in high-snowfall counties (over 80 inches annually).
County Road Commissions
Act 51 distributes MTF funds to county road commissions based on a complex formula considering various factors. These factors, summarized in Graphic 11, include road mileage (primary, local, urban), vehicle registrations within the county, rural population, and snowfall.
Graphic 11: MTF Distribution to County Road Commissions
| Criterion | Percentage of MTF Distribution | Factor |
|---|---|---|
| Primary Road Mileage | 6.4% | $2,164 per mile |
| Local Road Mileage | 16.4% | $2,374 per mile |
| Urban Road Mileage | 9.9% | $12,390/mile (primary urban), $2,065/mile (local urban) |
| Vehicle Registrations | 47.9% | 37¢ per dollar collected |
| 1/83rd Share (Primary Roads) | 9.6% | $1,056,287 per county |
| Rural Population | 8.8% | $16.88 per person |
| Snow Removal | 1% | Based on winter costs/snowfall |
| Total | 100% | $906,168,948 to counties |
Source: Michigan Department of Transportation. Data from July 2017.
Vehicle registrations within a county are the largest single determinant of MTF funding for county road commissions. MDOT releases monthly distribution factors enabling counties to calculate their MTF allocation based on population and road mileage. These factors are derived by dividing total MTF dollars available for a category by the statewide total for that category (e.g., total primary county road miles). Counties then multiply their respective figures by these factors to determine their allocation.
The most recent allocation factors are shown in Graphic 11’s last column. Each county receives a base of $1,056,287, plus 37 cents for every dollar of vehicle registration fees collected within the county, $16.88 per rural resident, and per-mile allocations for different road types.
The distribution formula attempts to balance the needs of urban and rural counties. Urban counties have more drivers and traffic volume (potentially leading to more road damage), while rural counties have extensive road networks relative to population. Allocating solely based on population would favor urban areas, while mileage-based allocation would favor rural areas.
Graphic 12 compares MTF distributions for urban and rural counties in 2017:
Graphic 12: MTF Distributions for Urban and Rural Counties, 2017
| Urban | Rural | |
|---|---|---|
| Average MTF Distribution | $23,029,055.57 | $4,890,398.72 |
| Average Population | 149,609 | 24,598 |
| Distribution Per Capita | $147.35 | $257.53 |
| Average Miles of Roads | 2,136.24 | 984.78 |
| Miles of Roads Per Capita | 0.0143 | 0.0400 |
Source: Author’s calculations based on data from July 2017 MDOT reports and data from the U.S. Census.
Urban counties receive significantly more MTF dollars on average, but rural counties receive 57% more per capita and have three times more road miles per capita. The current formula attempts to balance these factors.
Graphics 13-16 compare average road and bridge conditions in urban versus rural counties in 2017:
Graphic 13: Average Road Conditions in Rural Counties, 2017
Graphic 14: Average Road Conditions in Urban Counties, 2017
Graphic 15: Average Bridge Conditions in Rural Counties, 2017
Graphic 16: Average Bridge Condition in Urban Counties, 2017
There is minimal difference in average road and bridge conditions between urban and rural counties, suggesting Act 51’s distribution formula may be achieving a reasonable balance.
Cities and Villages
For cities and villages, 75% of MTF funds are designated for major streets and 25% for local streets. Of each portion, 60% is population-based and 40% is road mileage-based. Local street funding requires a municipal match.
MDOT uses allocation factors to distribute MTF revenue to cities and villages annually, based on population and road mileage. Unlike counties, cities and villages with larger populations receive a higher per capita allocation due to a population factor applied to major street mileage funds. Graphics 17 and 18 illustrate these factors, based on Plante Moran’s “Estimated Act 51 Revenue Worksheet” for fiscal year ending June 30, 2018:
Graphic 17: MTF Distribution to Cities and Villages
| Major Streets | Factor | |
|---|---|---|
| Criterion | Amount | |
| Population | $43.96 per person | n/a |
| Major Street Mileage | $12,660.75 per mile | See Graphic 18 |
| Trunkline Mileage | 2 x $12,660.75 per mile | See Graphic 18 |
| Local Streets | ||
| Population | $14.65 per person | n/a |
| Local Street Mileage | $3,335.25 per mile | n/a |
Graphic 18: Population Factors
| Population | Factor |
|---|---|
| From | To |
| 1 | 2,000 |
| 2,001 | 10,000 |
| 20,001 | 30,000 |
| 30,001 | 40,000 |
| 40,001 | 50,000 |
| 50,001 | 60,000 |
| 60,001 | 70,000 |
| 70,001 | 80,000 |
| 80,001 | 95,000 |
| 95,001 | 160,000 |
| 160,001 | 320,000 |
| Over 320,000 | See below |
Note: For population over 320,000, a factor of 2.1 is used plus 0.1 for every 160,000 over 320,000.
Cities and villages receive per capita allocations for major and local streets, and per-mile allocations for local streets. Major street mileage funds are population-weighted, increasing with municipality size. For example, a city with 1,000 residents receives $12,660.75 per major street mile (factor 1.0), while a city with 100,000 residents receives $24,055.4 per mile (factor 1.9). Detroit, Michigan’s largest city, receives approximately $29,119.70 per major street mile (factor 2.3). This population-weighting skews major street funding toward larger cities.
Furthermore, cities over 25,000 population receive trunkline mileage funding, calculated based on population factor and trunkline miles within city limits. This heavily benefits Detroit, which contains 22% of trunkline miles within cities of this size, netting the city an additional ~$17 million annually. This trunkline mileage distribution is questionable, as trunkline maintenance is MDOT’s responsibility, not the municipality’s. While cities contribute a small percentage to trunkline projects, this per-mile trunkline distribution is double the allocation for major street maintenance, which is the cities’ responsibility. Approximately $61.5 million was distributed to cities for trunkline maintenance in 2017, despite cities not being primarily responsible for these roads.
In summary, MTF distribution to cities and villages, while similar to counties in considering population and mileage, is skewed towards larger cities due to population-weighted major street mileage funding and trunkline mileage allocations. County distributions lack this population-based skew.
Counties, cities, and villages have some flexibility in MTF fund usage. With exceptions, they can transfer earmarked funds between categories. For example, counties can divert up to 30% of primary road funding to local roads, or 15% of local road funding to primary roads (up to 30% in emergencies or with MDOT approval). Cities and villages can use up to 50% of major street funding for local street maintenance (not construction), unless they adopt an asset management plan approved by MDOT.
Local Road Millages
Counties, townships, cities, and villages can supplement MTF funding with local property tax levies known as road millages. Graphic 19 presents data on these millages from 2017:
Graphic 19: Local Road Millages
| Unit of Government | Number With Road Millage | Total Units of Government | Percent with Road Millage | Average Millage Rate |
|---|---|---|---|---|
| County | 27 | 83 | 33% | 1.2298 mils |
| Township | 472 | 1240 | 38% | 1.7248 mils |
| City/Village | 150 | 533 | 28% | 2.7235 mils |
Source: Michigan Department of Treasury
A mill is $1 of tax per $1,000 of taxable property value (roughly half the property’s sale price). A homeowner with a $200,000 house in a city with a 2.7235 millage would pay $272.35 annually in road taxes. The impact of millages varies based on the millage rate and local property values, but they can be a significant funding source for some municipalities.
Evidence suggests road millages improve road quality in cities and villages. While county-level PASER data limitations make it difficult to assess millage impact at the county level (as both counties and townships can levy millages), city and village data allows for correlation analysis. Cities without road millages average 58% of roads in poor condition. Each mill of a city road millage correlates with a 6-point reduction in the percentage of poor roads (statistically significant). A 1-mill city millage correlates with an average of 52% poor roads, compared to 58% without a millage.
The correlation is weaker for villages. Villages without millages average 47% poor roads, but each mill correlates with only a 0.3-point reduction in poor roads (not statistically significant). This may be due to villages’ smaller populations and lower property values, meaning a millage generates less revenue, limiting improvement capacity. Villages may require significantly higher millage rates than cities to achieve comparable improvements. The average village road millage rate (3.3 mils) is indeed higher than cities (2.7 mils).
Special Assessment Districts (SADs)
Neighborhood streets in township subdivisions are under county road commission jurisdiction, but often receive less frequent maintenance due to prioritization of higher-traffic roads. Residents can petition to create Special Assessment Districts (SADs) to fund local road maintenance through property taxes within a defined area. SAD taxes must demonstrably increase property values within the district.
Creating an SAD requires a petition signed by 50% of property owners, followed by a public hearing. If the county road commission board approves, project bids are solicited, and a second public hearing is held to discuss costs. Final board approval authorizes the work and assessment, and costs are shared among SAD residents.
However, SADs for road funding are rare in Michigan. Only three townships (Clarence, Porter, Lenox) have SADs for roads; most SADs in the state are for fire services.
Michigan Transportation Fund Revenue Trends
The poor condition of many Michigan roads, with projections of trunkline road conditions worsening, stems largely from MTF revenue failing to keep pace with inflation and rising costs. Graphic 20 illustrates inflation-adjusted MTF revenue distributions from 1997-2017:
Graphic 20: Inflation-adjusted MTF Revenue Distributions, 1997-2017
Prior to the 2017 fuel tax and registration fee increases, MTF revenue had declined by 25% from its 2000 peak in inflation-adjusted terms. Even with the increases, revenue remained below the 2000 peak. Compounding this, road maintenance and construction costs have risen steadily, eroding the purchasing power of MTF dollars.
Crude oil prices, a major component of asphalt, significantly impact road costs. Graphic 21 shows the correlation between West Texas Intermediate crude oil prices and liquid asphalt prices:
Graphic 21: Price of Crude Oil vs. Price of Ton of Liquid Asphalt
Asphalt prices closely track crude oil prices. Graphic 22 illustrates the declining asphalt purchasing power of MTF revenue from 2000-2017:
Graphic 22: How Much Asphalt MTF Revenues Could Purchase, 2000-2017
Between 2008 and 2015, MTF revenue could purchase, on average, less than 25% of the asphalt it could in 2000. Even after the 2017 tax and fee increases, purchasing power was only half of 2000 levels.
Rising crude oil prices exacerbate this by potentially reducing fuel consumption (and thus fuel tax revenue) while simultaneously increasing asphalt costs. This “double whammy” further strains road financing.
Graphic 23 details the purchasing power decline of MTF revenue from 2000-2016:
Graphic 23: Purchasing power of MTF revenues, annual average change, 2000-2016
| Period | MTF Revenues | Inflation | Crude Oil | Asphalt |
|---|---|---|---|---|
| 2000-2007 | 1.1% | 2.7% | 14.5% | 11.4% |
| 2000-2016 | 0.8% | 2.1% | 5.5% | 7.3% |
MTF revenue growth lagged significantly behind inflation, crude oil price increases, and asphalt price increases. Michigan’s economic struggles during the 2000s further compounded these issues.
Graphic 24 compares Michigan’s economic performance to the national average from 2002-2017:
Graphic 24: Michigan vs. National Economy, 2002-2017
| Michigan | |||
|---|---|---|---|
| Period | GDP Growth | Unemployment | Per Capita Personal Income Growth |
| 2002-2007 | -0.6% | 6.9% | -0.3% |
| 2002-2017 | 0.4% | 7.9% | 0.3% |
| National Average | |||
| Period | GDP Growth | Unemployment | Per Capita Personal Income Growth |
| 2002-2007 | 2.7% | 5.3% | 1.2% |
| 2002-2017 | 1.8% | 6.3% | 1.0% |
Michigan experienced a “one-state recession” from 2001-2007, lagging behind national economic growth. This slower economic growth resulted in slower growth in vehicle miles traveled (VMT) in Michigan compared to the national average. Nationally, VMT increased ~12% from 2002-2016, while Michigan VMT increased only ~1%. This economic stagnation further reduced MTF revenue growth, creating a double burden of declining revenue and rising costs, significantly impacting Michigan’s road conditions.
Pricing Road Use in Michigan
Optimal Public Goods Financing
In a free market, prices adjust to reflect production costs, ensuring sustainable production and efficient consumption. Consumers weigh costs and benefits before purchasing. This efficiency is challenged with public goods like roads, which are “nonexcludable”—users cannot be prevented from using them even without payment. This leads to overuse and degradation, as users don’t fully consider the costs of their usage, and producers lack revenue for upkeep.
The solution is user fees—unavoidable charges that cover the cost of providing the public good. Tolls on limited-access highways are a direct example. If road use causes $5 damage, a $5 toll internalizes the cost, ensuring only trips with benefits exceeding costs are taken and providing revenue for maintenance.
Less direct user fees, like gasoline taxes, can also work if appropriately set. A $5 gas tax for the same trip achieves similar efficiency if the tax revenue is dedicated to road maintenance. The key is that user fees equal to the cost of use promote efficient public good utilization, mirroring free market efficiency for private goods. Underpriced user fees lead to overuse, while overpriced fees underutilize beneficial public goods.
Estimating Road Use Costs in Michigan
The Congressional Budget Office (CBO) surveyed research estimating pavement damage costs per mile for different vehicle types. Graphic 25 summarizes these estimates (adjusted to 2018 dollars):
Graphic 25: Estimated pavement damage cost by different types of vehicles, dollars per mile
| Vehicle Type | Rural Roads | Urban Roads |
|---|---|---|
| Passenger | $0.00 | $0.00 |
| 40,000 pounds, 4-axle | $0.01 | $0.04 |
| 60,000 pounds, 4-axle | $0.09 | $0.26 |
| 60,000 pounds, 5-axle | $0.04 | $0.16 |
| 80,000 pounds, 5-axle | $0.19 | $0.60 |
These estimates, while approximate, clearly show heavy commercial trucks cause significantly more pavement damage. Passenger vehicle damage is negligible (rounding to zero). Urban road damage costs are higher than rural. Heavy trucks on urban roads cause the most pavement damage.
Comparing these costs to current user fees is informative. Passenger vehicles pay roughly 3 cents per mile in fuel taxes and registration fees in Michigan (based on average fuel efficiency and registration costs). MDOT estimates an 80,000-pound truck pays about 11 cents per mile in state and federal user fees.
These estimates suggest commercial trucks are not paying the full cost of pavement damage, especially in urban areas, while passenger vehicles may be overpaying relative to pavement damage. In terms of pavement damage, passenger vehicles appear to subsidize commercial trucks.
Challenges in Funding Michigan Roads
MDOT estimates the average cost to reconstruct or rehabilitate one lane mile at $1.3 million. With 25% of trunkline roads (30,000 lane miles) in poor condition, immediate trunkline reconstruction would cost ~$9.7 billion. Additionally, 48% of federal-aid county roads and 46% of city/village federal-aid roads are poor, totaling ~28,500 lane miles. Assuming a lower reconstruction cost of $1 million per lane mile for nontrunkline roads, these would cost ~$28.5 billion to repair. Non-federal-aid roads, with 165,000 lane miles and 37% in poor condition, would cost another ~$61 billion. Thus, addressing all poor-condition roads in Michigan would require nearly $100 billion, or ~$3 billion annually for 30 years.
Securing increased road funding faces significant challenges. Michigan voters resoundingly rejected Proposal 1 of 2015, which would have increased sales tax, fuel taxes, and registration fees to generate ~$2 billion in additional revenue. The 80% “no” vote signaled strong public resistance to broad tax increases for road funding.
While the legislature has allocated more general fund money to roads recently, this is likely unsustainable. Road funding competes with numerous other state spending priorities. Dedicating a large portion of the general fund to roads would represent a major shift in spending priorities.
Graphic 26 shows the composition of Michigan’s $56.3 billion fiscal year 2018 state budget:
Graphic 26: Fiscal Year 2018 Executive Budget
Public schools and Health and Human Services (HHS) dominate, comprising ~75% of the budget, with HHS alone nearly half.
Compare this to Michigan’s fiscal year 2000 budget (inflation-adjusted to $50 billion), shown in Graphic 27:
Graphic 27: Fiscal Year 2000 Executive Budget
In 2000, HHS (then “Community Health” and “Family Independence Agency”) was only ~33% of the budget. HHS spending has since increased from ~$17 billion to $25.5 billion. Even accounting for federal matching funds, this represents a significant ~$2 billion annual increase in HHS spending. The state has clearly prioritized health and medical services. If this trend continues, especially with potential revenue declines, allocating more general fund money to roads will become increasingly difficult without a major shift in state spending priorities.
Conclusion and Policy Recommendations
Michigan’s trunkline road system is currently in reasonably good condition but is projected to deteriorate significantly in the next five years. County, city, and village roads are already in poor condition, requiring substantial investment and time to remedy. To address these challenges, policymakers should consider the following 10 recommendations:
Recommendation 1: Enhance Road Condition Data Collection
Implement comprehensive PASER data collection for all roads (federal-aid and non-federal-aid) at all government levels. Data should be reported to TAMC and made publicly accessible. Townships should report separate PASER ratings from county-wide data. Improved data will enable better resource allocation and prioritization of road maintenance needs at all levels.
Recommendation 2: Eliminate Vehicle Registration Fee Exemptions
Remove registration fee discounts for commercial trucks. Trucks are the primary cause of pavement damage, and even without discounts, truck user fees are likely underpriced. These discounts cost the MTF millions annually without clear economic justification.
Recommendation 3: Reallocate Funds from Cities for Trunkline Mileage
Discontinue MTF allocations to cities over 25,000 population based on trunkline mileage. These funds should be redirected to the state trunkline fund, as MDOT is responsible for trunkline maintenance. Eliminate the requirement for cities to contribute to trunkline projects, as their contribution is already minimal. This reallocation would have added ~$61.5 million to the trunkline fund in 2017.
Recommendation 4: Prioritize Trunkline System Funding
Increase trunkline fund allocations to meet MDOT’s estimated $1.13 billion annual need to prevent further deterioration and achieve 90% trunkline roads in fair or good condition. Prioritize trunkline maintenance, as these roads carry the vast majority of Michigan traffic and are crucial to the state economy. Increased funding should first target trunkline improvements before other road categories.
Recommendation 5: Dedicate Fuel Sales Tax Revenue to Roads
Consider a constitutional amendment to allow sales tax revenue from fuel purchases to be added to the MTF. This would have added approximately $800 million in road funding in 2017, significantly boosting available resources.
Recommendation 6: Pilot a Vehicle Miles Traveled (VMT) Tax Program
Pilot a VMT tax program, charging drivers per mile driven, similar to tolls. Technology allows for tracking miles and charging fees. Oregon’s “OReGO” program, charging 1.7 cents per mile, provides a working model. VMT tax is a more direct user fee than fuel taxes and could eventually replace them, especially with increasing fuel efficiency and electric vehicle adoption. Address privacy concerns by using private vendors for VMT tax administration, as in Oregon.
Recommendation 7: Base Vehicle Registration Fees on Weight
Shift vehicle registration fees from being based on vehicle value to being based on vehicle weight. Heavier vehicles cause more pavement damage, so weight-based fees create a more efficient user-fee system, incentivizing lighter vehicles. This would also address the issue of electric and hybrid vehicles paying less fuel tax despite road use, as they tend to be heavier and would pay higher registration fees. The current electric/hybrid vehicle surcharge could then become unnecessary.
Recommendation 8: Eliminate the Transportation Economic Development Fund
Eliminate the Transportation Economic Development Fund and redirect its funding to trunkline maintenance. The state already has extensive economic development programs. If projects funded by TEDF are valuable, they can seek funding through existing MEDC or Michigan Strategic Fund programs. Commercial vehicles, already potentially subsidized by passenger vehicles and benefiting from registration discounts, do not have a strong justification for additional targeted subsidies from the MTF.
Recommendation 9: Support Local Road Millages
Encourage counties, townships, cities, and villages to consider local road millages. The state could offer incentives to promote millage feasibility studies and implementation. Local governments should share responsibility for road funding. The state could also explore loan guarantees or similar mechanisms to assist local governments in financing road improvements, similar to state support for school facility funding.
Recommendation 10: Reduce or Eliminate the Comprehensive Transportation Fund
Reduce or eliminate the Comprehensive Transportation Fund. Funding local public transit through statewide fuel taxes and vehicle registration fees is a less efficient approach than user-fee models. Local transit system costs should be borne by local taxpayers and service users who directly benefit.
Endnotes
1 Keith Laing, “Poll: Michigan Drivers Hate Their Roads,” The Detroit News, March 1, 2016, https://perma.cc/D3VY-439V.
2 “Public Opinion Survey: Michigan Roads and Bridges Funding” (Michigan Chamber of Commerce, Apr. 2014), https://perma.cc/7YBP-VBHC; “In Yet Another Poll, Michigan Voters Rank Fixing Infrastructure as the Top Problem Facing State” (Fix MI State, Jan. 9, 2018), https://perma.cc/9S7L-R334.
3 “PASER Manual: Asphalt Roads” (Wisconsin Transportation Information Center, 2002), 15, https://perma.cc/C4RV-YRRJ.
4 MCL § 247.659a; “Michigan Transportation Asset Management Council” (Michigan Transportation Asset Management Council), https://perma.cc/MM7W-BC8D.
5 “TAMC PASER Training Manual” (Center for Technology & Training, 2017), 5, https://perma.cc/C2XL-7XMH.
6 Ibid., 5-6.
7 “Bridge Structural Elements Design” (Michigan Department of Transportation, 2018), https://perma.cc/E993-KK9N.
8 “Tables of Frequently Requested NBI Information” (Federal Highway Administration, April 10, 2018), https://perma.cc/6FVP-VKYM.
9 “National Bridge Inventory Rating Scale” (Michigan Department of Transportation, 2018), https://perma.cc/T5QG-BDZF.
10 “Bridge Safety Inspection: NBI Ratings Guidelines” (Michigan Department of Transportation, March 9, 2011), https://perma.cc/V733-Q8TJ.
11 “Fast Facts 2018” (Michigan Department of Transportation, Jan. 2018), https://perma.cc/HS8E-3WHJ.
12 “2016 System Performance Measures Report” (Michigan Department of Transportation, June 1, 2016), https://perma.cc/7XEL-MAAY.
13 “2015-2019 Five-Year Transportation Program” (Michigan Department of Transportation, Jan. 22, 2015), 15, https://perma.cc/ NLZ7-E5M5.
14 Based on data from the Michigan Transportation Asset Management Council, available here: https://www.mcgi.state.mi.us/ mitrp/tamcDashboards.
15 “Michigan’s 2017 Roads & Bridges Annual Report” (Michigan Transportation Asset Management Council), https://perma.cc/T385-BV9L.
16 Ibid.
17 Based on data from the Michigan Transportation Asset Management Council, available here: https://www.mcgi.state.mi.us/ mitrp/tamcDashboards.
18 “Michigan’s 2017 Roads & Bridges Annual Report” (Michigan Transportation Asset Management Council), https://perma.cc/T385-BV9L.
19 Based on data from the Michigan Transportation Asset Management Council, available here: https://www.mcgi.state.mi.us/ mitrp/tamcDashboards.
20 “Michigan’s 2017 Roads & Bridges Annual Report” (Michigan Transportation Asset Management Council), 9, https://perma.cc/T385-BV9L.
21 Ibid.
22 MCL § 247.651 et seq.
23 “Definitions: Federal-Aid Highways, Federal-Aid Systems and Federal-Aid Eligible” (Michigan Department of Transportation, 2018), https://perma.cc/6AYC-HZNJ.
24 “Federal-Aid Program Overview, General Information: Funding Basics and Eligibility” (Federal Highway Administration), https://perma.cc/A7WB-2M2M.
25 Paul Egan, “Michigan Not a ‘donor State’ for Federal Road Dollars,” Detroit Free Press, Dec. 8, 2014, https://perma.cc/7U29-URPX.
26 “Department of Transportation Funding History” (Michigan Senate Fiscal Agency, June 25, 2018), https://perma.cc/SQF3-EGL4.
27 William E. Hamilton, “Act 51 Primer: A Guide to 1951 Public Act 51 and Michigan Transportation Funding” (Michigan House Fiscal Agency, Feb. 2007), 2, https://perma.cc/SM64-8LF8.
28 “Michigan Department of Transportation 2017 Annual Financial Report” (Michigan Department of Transportation, Feb. 16, 2018), https://perma.cc/46WD-Q6FK.
29 David Eggert, “Higher Fuel, Vehicle Taxes Start Sunday in Michigan,” Crain’s Detroit Business (Associated Press, Dec. 31, 2016), https://perma.cc/N3N4-23V5.
30 “Distribution and Earmarking of Michigan’s Major State Taxes” (Michigan Senate Fiscal Agency, May 2015), https://perma.cc/3AGP-P5QJ.
31 “2018-2022 Five-Year Transportation Program” (Michigan Department of Transportation), 29, https://perma.cc/67RY-DET6.
32 “How Do I Calculate IFTA” (Rigbooks, LLC, 2018), https://perma.cc/ 3M7Y-EHAG.
33 MCL § 257.801(1)(p)(i)(B).
34 MCL § 257.801(1)(k)(ii).
35 MCL § 257.801(1)(o).
36 MCL § 257.801(1)(c)-(d).
37 “Michigan’s Truck-Weight Law and Truck-User Fees” (Michigan Department of Transportation), 3, https://perma.cc/9EN7-U2QQ.
38 Ibid.
39 Emma Ockerman, “Michigan Vehicle Registration Will Soon Go up by 20%,” Detroit Free Press, Dec. 20, 2016, https://perma.cc/JPH8-FZTB.
40 “Michigan’s Truck-Weight Law and Truck-User Fees” (Michigan Department of Transportation), 1, https://perma.cc/9EN7-U2QQ.
41 “Truck Weights in Michigan” (Michigan Department of Transportation, Jan. 2017), https://perma.cc/X4JQ-JBU4.
42 “Michigan Transportation Fund and Local Program Fund: Summary of Receipts and Distributions” (Michigan Department of Transportation), https://perma.cc/2VUY-XMHY.
43 “Transportation Economic Development Fund: Annual Report, Fiscal Year 2017” (Michigan Department of Transportation, Dec. 13, 2017), 2, https://perma.cc/C7PK-WEH8.
44 “Michigan Transportation Fund and Local Program Fund: Summary of Receipts and Distributions” (Michigan Department of Transportation), https://perma.cc/2VUY-XMHY.
45 “Act 51 Made Simple” (Michigan Department of Transportation, Aug. 2000), https://perma.cc/EJW2-TB6U.
46 William E. Hamilton, “The Comprehensive Transportation Fund and State Support for Local Public Transit Agencies: Presentation to Michigan Public Transit Association” (Michigan House Fiscal Agency, Aug. 25, 2017), https://perma.cc/FPG5-983M; “Comprehensive Transportation Fund for Public Transit Programs” (Michigan Department of Transportation, Aug. 22, 2017), https://perma.cc/HV6S-LY2W.
47 MCL § 247.660(1)(l).
48 William E. Hamilton, “MTF Distribution Formula to Local Road Agencies” (Michigan House Fiscal Agency, May 1, 2018), https://perma.cc/BQ2Y-AABQ; “Act 51 Made Simple” (Michigan Department of Transportation, Aug. 2000), https://perma.cc/EJW2-TB6U.
49 William E. Hamilton, “MTF Distribution Formula to Local Road Agencies” (Michigan House Fiscal Agency, May 1, 2018), https://perma.cc/BQ2Y-AABQ.
50 These can be found here: “County Allocation Factors” (Michigan Department of Transportation, 2018), https://perma.cc/V8U3-6A8H.
51 Based on data from July 2017 published by the Michigan Department of Transportation.
52 William E. Hamilton, “MTF Distribution Formula to Local Road Agencies” (Michigan House Fiscal Agency, May 1, 2018), 3, https://perma.cc/BQ2Y-AABQ.
53 “Act 51 Made Simple” (Michigan Department of Transportation, Aug. 2000), https://perma.cc/EJW2-TB6U.
54 “City/Village Allocation Factors” (Michigan Department of Transportation, 2018), https://perma.cc/U9PQ-PTWX.
55 See: Michelle Watterworth and Keith Szymanski, “Michigan Department of Transportation Releases 2018 Distribution Rates” (Plante Moran, March 8, 2017), https://bit.ly/2ObJn2c.
56 William E. Hamilton, “MTF Distribution Formula to Local Road Agencies” (Michigan House Fiscal Agency, May 1, 2018), 3, https://perma.cc/BQ2Y-AABQ.
57 MCL § 247.651c(1)(a)(i)-(iv).
58 William E. Hamilton, “MTF Distribution Formula to Local Road Agencies” (Michigan House Fiscal Agency, May 1, 2018), 3, https://perma.cc/BQ2Y-AABQ.
59 MCL § 247.662(9).
60 MCL § 247.663(6).
61 For more information about SADs, see: “Subdivision Paving (Special Assessment District)” (Road Commission of Oakland County), https://perma.cc/34YE-4G8A; “Special Assessments and User Charges,” in Handbook for General Law Village Officials (Michigan Municipal League, 2015), https://perma.cc/Q7GL-7W34.
62 “Citizen’s Guide to Special Assessment Districts” (Charter Township of Independence, July 2015), https://perma.cc/L2WG-FHB8; “The RCOC Special Assessment District Paving Process” (Road Commission of Oakland County), https://perma.cc/9DPK-KJ2E.
63 “US Business Cycle Expansions and Contractions” (National Bureau of Economic Research, Sept. 20, 2010), https://perma.cc/4SK5-8MCM.
64 “Vehicle Miles Traveled” (Federal Reserve Bank of St. Louis, Aug. 20, 2018), https://perma.cc/LB7E-EQSB.
65 “Historical Perspective: Vehicle Miles Traveled” (University of Michigan, 2018), https://perma.cc/2893-ASUF.
66 “Alternative Approaches to Funding Highways” (Congressional Budget Office, March 2011), https://perma.cc/H4FV-HDDQ.
67 Ibid., 5.
68 “Gas Mileage of Vehicles on the Road: Little Progress since Early ’90s” (University of Michigan, Aug. 17, 2015), https://perma.cc/S2RB-YYK7.
69 “Truck Weights in Michigan” (Michigan Department of Transportation, Jan. 2017), https://perma.cc/X4JQ-JBU4.
70 James M. Hohman, “Proposal 1 of 2015: An Analysis” (Mackinac Center for Public Policy, March 25, 2015), https://perma.cc/5YZL-TK3P.
71 Joseph Rose, “Oregon Mileage Tax Officially Named ‘OreGo’ as Sign-up Website Goes Live,” The Oregonian, Feb. 18, 2015, https://perma.cc/6KGU-ER7U.
