With the new budget, Michigan will spend more money on roads than ever before, when adjusted for inflation. The $5.4 billion the state is spending on roads from its own funds — not including federal transfers or the small amounts of local and private money — is 15% more than the previous peak in 2019.
The chart includes transportation spending going back to 1951, when the state ran a highways department rather than the Michigan Department of Transportation. (For notes on methods and alternative measures, see my 2019 assessment.)
Lawmakers have been able to budget for record levels of road funding, mostly without raising taxes. They swapped the sales tax levied on fuel — 73% of which goes to the school aid fund — for an equivalent per-gallon tax that goes to the transportation budget. Even with this change, lawmakers approved $510 million more for schools than they did last year.
A growing budget allows lawmakers to accomplish their goals, and rearranging which tax goes into what pocket of spending helped them do it. Lawmakers spent $34.4 billion in state money on all departments and program before the pandemic. They budgeted $46.8 billion last year, an 8% gain when adjusting for inflation.
Yet the growth of state revenue and state spending did not stave off a tax hike on marijuana. Marijuana, subject to a 6% sales taxes and an extra 10% tax, will now face an additional 24% tax on wholesale purchases. State administrators expect the tax to generate $420 million a year. Still, that is a smaller amount than the $1 billion switch from sales taxes to gas taxes that will be added to the transportation budget.
Whether the increases in road funding will be sufficient to fix roads faster than they deteriorate is a different question. In 2019 the state was able to repair roads as quickly as they fell apart. The latest budget increases road spending by 15%, even after inflation. If that’s not enough to do more than maintain the status quo rather than improve the roads, the problem will likely lie with the cost of construction, not the funding level.
Lawmakers are now spending record levels on roads and got to this point mostly without hiking taxes.
