Talking Michigan Transportation

Highlights of Gov. Whitmer’s road-funding plan

• Michigan Department of Transportation • Season 7 • Episode 210

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On this week’s edition of the Talking Michigan Transportation podcast, Zach Kolodin, the state’s chief infrastructure officer, breaks down the highlights of a road funding plan released by Gov. Gretchen Whitmer’s office on Monday, Feb. 10.

Kolodin first talks briefly about federal grants the state and many municipalities have received the past few years. Among some large grants for state roads and bridges was a $73 million award to replace an aged movable bridge in Bay City. 

Talking about the governor’s road-funding plan, Kolodin explains how removing the sales tax on fuel, which does not fund roads and bridges, would allow for every penny drivers spend at the pump to go toward road repairs.

The plan would backfill the sales tax with a combination of cuts and additional revenue from closing the wholesale tax loophole on marijuana and assessing other fees.

Jeff Cranson:

Hello, welcome to the Talking Michigan Transportation Podcast.

Jeff Cranson:

I'm Jeff Cranson.

Jeff Cranson:

In this episode I spoke with Zach Kolodin, who is the Chief Infrastructure Officer for Governor Gretchen Whitmer here in Michigan.

Jeff Cranson:

He runs the Michigan Infrastructure Office and we talked about a plan for funding roads that the governor rolled out on Monday we recorded this on Thursday, so that was three days ago and he'll hit all the highlights and why he thinks and we hope, that this could be truly a somewhat sustainable comprehensive road funding solution for roads at all levels, both cities, counties and the state state routes, what we call the trunk lines, something that has eluded policymakers for decades.

Jeff Cranson:

So we're hopeful on that front, and he'll talk a little bit first about the various grants that came out of the federal government in the past few years, including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and others, and how those grants many of them, flowed to Michigan and have made a huge difference both at the local level and again on state roads and bridges. So I hope you enjoy the conversation. So again, I'm here with Zach Kolodin, who is the Chief Infrastructure Officer for the state of Michigan. He's been at it for a few years now. Zach, before we jump into the governor's road funding plan, let's remind people a little bit about your background in your office and what you do.

Zach Kolodin:

Yeah, absolutely.

Zach Kolodin:

The Michigan Infrastructure Office was created by Governor Whitmer in order to maximize the value of infrastructure dollars from the federal government for the people of Michigan.

Zach Kolodin:

So a quick history lesson for those who need a refresher the Bipartisan Infrastructure Law was passed in late 2021, followed shortly thereafter by the Inflation Reduction Act and the Chips and Science Act. These acts together launched some significant federal programs to revitalize manufacturing, infrastructure and energy in America and presented an amazing opportunity for Michigan to jumpstart its economic development goals, infrastructure goals and improve quality of life for people in Michigan if we were able to mobilize state government to go get that money. And that's exactly what the Michigan Infrastructure Office was designed to do. So since we launched in 2022, Michigan has received over $14 billion in infrastructure funding over $2 billion in funding from the Inflation Reduction Act from the federal government and leads the country in newly announced clean energy projects since the passage of the Inflation Reduction Act. And I think that speaks to the whole government approach that we've taken in the Whitmer administration to partner with the federal government in order to achieve our shared goals.

Jeff Cranson:

And a lot of these grants are for the locals. They're not just for the Michigan Department of Transportation trunk lines and bridges. You want to highlight a few of what you think are the more significant grants of what you think are the more significant grants.

Zach Kolodin:

Yeah, absolutely so. You know, grants range from smaller grants for you know, flood resilience and safe streets projects to major grants like replacement of the Lafayette Bridge, replacement of the River Raisin Bridge. So you know, we've seen incredible success stories all across the state. Communities in Michigan have received grants for projects of all shapes and sizes. As one example, the Sault Ste Marie tribe of Chippewa Indians received a grant to revitalize infrastructure in their community, improve walkability, improve bikeability. That project embodies the Ojibwe phrase that means the good life and that was sort of the name of and the purpose behind their project. And I think that broader idea of infrastructure making the good life possible in Michigan speaks to what is possible when communities work together for the common good.

Zach Kolodin:

Kalamazoo has combined grants for safe streets, for reconnecting communities, for resilience, in order to revitalize their downtown, make it more resilient to extreme weather events and slow down traffic by converting one-way streets to two-way streets. We've seen, you know, the Monroe win grants for railroad crossing elimination, for revitalization of their port terminal and opening it up to container shipping. So you know, local grants all across the state have meant a lot to communities and actually the Michigan Infrastructure Office set up a technical assistance center to make it easier for communities to access that funding. So we were recently able to announce that, as a result of match funding provided by the Infrastructure Office and technical support, menominee was able to receive a $3.5 million grant from the federal government. So you know we're looking forward to continuing those partnerships and think that you know communities across the state can benefit a lot from partnering with the federal government to fund their infrastructure needs and also partnering with the state to put them in the best position to win.

Jeff Cranson:

Yeah, I think that assistance, that technical assistance, is really a big deal. It's kind of similar to what MDOT's done with its local bridge bundling program, offering assistance for contracting expertise and engineering expertise, and it's a way to help the locals that don't have the resources to do a lot of those things. And I think you're right that technical assistance has made a huge difference. And also, you mentioned the Lafayette Bridge in Bay City. That's a $73 million grant and that work is well underway. Long needed, very old bridge. It's had a lot of problems, like a lot of movable bridges do. So, yeah, I'm glad you called that one out. So let's talk about the issue of the week. In the news, the governor we're recording. On Thursday the 13th, on Monday the 10th, governor Whitmer rolled out a very comprehensive road funding plan. You want to just give us the highlights you want to just give us the highlights.

Zach Kolodin:

Yeah, absolutely so. The governor presented the my Road Ahead Plan, which is a fiscally responsible, sustainable, long-term road funding plan that will fix the roads for years to come and not on the backs of commuters. I think folks are familiar with the challenge we're facing here. When Governor Whitmer was running for office, she first promised to fix the damn roads, because Michiganders have been struggling with deteriorating, unsafe roads that cause costly auto repairs and long travel times, and all of that is brought about by decades of disinvestment in Michigan infrastructure. In order to maintain quality infrastructure, you have to put in the maintenance work year after year after year, and I think folks understand this because a lot of folks live in, or have family or friends who live in, houses that are over 50 years old in Michigan. We have older housing stock here. You know that if you don't maintain the roof, that eventually you're going to spring a leak, and it's no different on our roads. Every road in the state is an aging piece of infrastructure that requires maintenance on a regular basis, and so that's why investment is so important. With the help of the Rebuilding Michigan plan, since taking office, the governor fixed 23,000 lane miles of road and 1,600 bridges, and all without raising costs for drivers. But what I think folks don't always understand is that the Rebuilding Michigan Plan is a stopgap measure that is designed to bring our roads back up to quality condition, especially at the level of state highways, or state trunk lines, as people call them in the transportation world, but is not a long-term plan.

Zach Kolodin:

The bonds that funded rebuilding Michigan have to be paid off, and they are one-time dollars, so what we need to do is be able to rebuild Michigan, not just between 2020 and 2025, but consistently over the long term, with a sustainable revenue source that we can depend on.

Zach Kolodin:

And you know, it's not just roads that require that kind of maintenance, it's also the state's transit system. When we do surveys of what folks that are considering where to locate their families need and what they're looking for when they first settle in a community, quality transit, young folks without the need for a private automobile is crucial, and so Governor Whitmer's plan proposes $250 million in ongoing funding for transit, which would be a game changer for transit in this state. We have suffered from disinvestment in transit for decades, and that kind of funding would allow us to ensure that really every Michigander has access to quality transit services to get them where they need to go. So that's kind of the high-level vision, and obviously we can delve deep into the different mechanics of that, but I think that's the big picture, Jeff. Well, think that's the big picture, Jeff, so where should we go from there?

Jeff Cranson:

Well, yeah, I mean forever really. I mean as long as when I was assigning stories and writing columns and editorials about this. Years ago we were talking about the sales tax on fuel and how deceiving it is. And I've learned in this job that every list you see, every national chart of states and gas taxes that shows Michigan among the tops has to come with an asterisk because of that sales tax. And none of that goes to roads. It goes to some very important uses obviously the school aid fund and local revenue sharing and the comprehensive transportation fund, which is not for roads but is for public transportation. So just solving that so that we can say, you know, plainly to people, hey, everything you pay at the pump goes to roads, that alone would be huge and I think that I think there's a lot of agreement among you know, various parties that have an interest in this, in that part of it. But the devil, obviously, is the detail of backfilling that money. So why don't you talk about the revenue sources that could make up for that?

Zach Kolodin:

Yeah, no, you're right that a key feature of the governor's plan is ensuring every dollar Michigan drivers pay at the pump goes to roads. The governor's plan closes the gap created by diversion of sales tax revenue to ensure that every penny goes toward Michigan infrastructure. When you make that change, you need to come up with a strategy to make sure that we are still funding our schools responsibly, that we're still funding local government appropriately, and I think what the governor's plan does is recognize that there is a very strong connection between schools and the educational talent that comes out of our schools and the high-quality workforce that we need to continue to grow the economy in Michigan, and so creating a stronger link between school funding and revenue from big businesses makes sense, and additional revenue from a variety of sources. That covers things like digital advertising those annoying pop-up ads, as well as other kinds of digital services and corporations that use our roads most heavily will help hold the school aid fund harmless and also generate additional revenue to help fix the roads.

Jeff Cranson:

Stick around. There's more to come right after this short message.

MDOT Message:

Michigan law requires drivers to maintain at least 200 feet behind a snowplow when crews are plowing or treating roads and have their lights on. This does not apply when passing the snowplow. In addition, stay at least 20 feet away when the plow is stopped or at an intersection. Failure to do so can result in a fine of $100. The law is meant to ensure snowplow operators have the proper space and time to clear the roads. This makes Michigan's roads and neighborhoods safer to drive on and walk around throughout the winter. Always remember snowplows need room to groom.

Jeff Cranson:

Is there a model for taxing those digital ads? Do some other states do that?

Zach Kolodin:

Yeah, absolutely. States do that. Yeah, absolutely.

Zach Kolodin:

Maryland has imposed a tax on digital advertising and is collecting a significant amount of revenue, and for what it's worth.

Zach Kolodin:

There is a distinction between your mom and pop shop that wants to make folks aware of their business and the big players that make billions in advertising revenue every year.

Zach Kolodin:

So under the governor's plan, small business wouldn't pay a dime more for digital advertising, but that revenue would be shouldered by some of the bigger firms that are collecting a lot of revenue from Michiganders' eyeballs online. And I just want to emphasize that the governor's plan is not just based on new revenue. Right, we are focused on cutting red tape and finding savings to help pay for roads. So the governor's plan injects $500 million of additional funding into road and bridge repairs through finding efficiencies elsewhere in state government and foregoing the kind of one-off legislative earmarks that don't really represent the best interests of the people of Michigan. And then, finally, we're closing loopholes in our tax system that are created by the fact that Michigan legalized marijuana before many other states did and, as a result, our tax system misses some of the revenue that other states have been able to collect. Circle and making sure that we are collecting from marijuana producers at the wholesale level can raise an additional $470 million for the roads, really fulfilling the pot for potholes promise that was originally pushed when marijuana was legalized.

Jeff Cranson:

So we're saying that's part of a sustainable solution we're banking on people continuing to consume as much weed as they do now.

Zach Kolodin:

So it may continue to grow or may level off. I think that a nearly $500 million revenue line is based on the Treasury Department's best estimate of what we'd be able to collect from that tax. Sure makes sense. Who pays? It's also about how we divvy up the money.

Zach Kolodin:

So you know, as I alluded to earlier, the Rebuilding Michigan plan focused on the state trunk lines which, to be very clear, state trunk lines need long-term sustainable funding. However, local roads have not received the same level of attention and funding from the state over the last number of decades, and so local roads are in an even more dire state than state roads are at this moment. The governor's plan recognizes that and proposes to allocate a higher percentage of the new revenue toward local roads. That means toward county roads, toward roads maintained by a city or village, and many of these roads are, you know, extremely consequential economic engines for their region. You know, think of Mound Road in Macomb County. There's so much business activity, so much life that happens on our local roads and we can't leave them behind. So the governor's plan recognizes that and puts a significant focus on increasing the amount of revenue that they get, not just because we are increasing the size of the pie that goes to fund our infrastructure, but also because we are allocating a higher percentage of that revenue going forward to locals.

Jeff Cranson:

Yeah, I think that's a key point, and certainly while MDOT is charged with the jurisdiction of the state routes, what we call the state trunk lines. We all drive those roads, we all drive from our homes to the highways on those roads and we care a great deal about that, and that's why some cities, some counties, some townships have for years passed their own millages. In the case of the city of Grand Rapids, they passed an income tax for streets and taking it into their hands. But there's still a lot more to be done in all those places and I think the governor's plan will really help with a lot of those gaps. So is there anything else you want to highlight about the plan?

Zach Kolodin:

Yeah, no, I think we pretty much covered it.

Jeff Cranson:

Yeah, good. Well, Zach, thanks again. It'll be interesting to watch this as the discussions go on between the governor and the legislature and see where we can get. I'll be optimistic. We haven't really had a road funding deal since 2015. But a couple of good things came out of that, one being the indexing on the gas tax for inflation, and the other being putting diesel at parity with regular gas. That alone was a huge thing to do to put a little bit more of the burden on the trucks that use the roads, and this plan takes that another step. So that's good too.

Zach Kolodin:

Yeah, yeah, you know, Jeff. One thing I would add is that I think what's really exciting is that the governor's my Road Ahead plan and what Speaker Hall has outlined over the last month or two agree on one point, which is that $3 billion of additional investment in infrastructure in this state is needed. I think getting that level of agreement from the governor's office and the head of one of the legislative chambers that is run by the other party represents a real step forward, and I think what the governor's plan is trying to do is say you know, we agree that this is a major problem that demands a solution. We believe there's a way to get sustainable road funding without undercutting our schools and without compromising on our future, our future of job growth, economic development in this state, and we think that there's room for a conversation and there's room for there's a lot of room for compromise. So we're very hopeful that the governor and Speaker Hall will be able to find common ground on a sustainable solution that that meets everyone's needs.

Jeff Cranson:

Very well said, Zach. I really appreciate, as always, you taking time to talk on the podcast and explain these things, and it'll be interesting to see where things go. So thank you again.

Zach Kolodin:

Yeah, my pleasure. Thanks, Jeff.

Jeff Cranson:

Thanks for having me on Apple Podcasts or Buzzsprout. I also want to acknowledge the talented people who help make this a reality each week, starting with Randy Debler, who skillfully edits the audio, Jesse Ball, who proofs the content, Courtney Bates, who posts the podcast to various platforms, and Jacke Salinas, who transcribes the audio to make it accessible to all.