Michigan Wisely Looks to Tolling to Help Finance Road and Bridge Repairs
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Michigan Wisely Looks to Tolling to Help Finance Road and Bridge Repairs

Tolling can be used as an effective tool and sustainable revenue source to help meet the state's transportation needs.

Michigan drivers and taxpayers have been complaining about road and highway conditions for years. But the solutions policymakers have recently proposed ranged from the politically impossible, like raising the gas tax 45 cents per gallon, to financially-risky short-term fixes like borrowing billions in bonds to pay for teacher pension contributions so that money could be shifted to funding for roads.

But it seems like Michigan lawmakers may be warming up to a long-term, sustainable, users-pay solution to achieving better roads: tolling.

Lansing’s interest in tolling has gone back decades but this year the state Legislature and Gov. Gretchen Whitmer’s administration have taken big steps to make tolling a reality.

This spring, Public Act 140 of 2020 authorized a two-part tolling study to look at whether tolling is a feasible way to help rebuild the state’s Interstates and major freeways. The legislation enjoyed strong bipartisan support in both the House and Senate and from a wide range of stakeholders, including the Michigan Department of Transportation (MDOT).

The tolling study could provide a pathway for a long-term solution to funding and modernizing Michigan’s highways, which are in poor condition and experiencing growing traffic congestion compared to the rest of the nation.

Although Michiganders might have apprehension about tolling, it is a proven way to reduce traffic congestion and improve roadway conditions. Tolling also employs the user-pays principle that would negate the need for considering an unpopular statewide tax increase to fund certain road repairs.

Months before that study is even set to begin, we are already seeing other public-private partnership toll projects materialize in Bay City. Without the resources to pay for $30 million worth of needed improvements and construction to the Liberty and Independence Bridges, last year Bay City entered into a public-private agreement with United Bridge Partners to finance repairs and manage the maintenance of the crossings.

However, Bay City needs changes to state law to make the deal feasible. And Michigan lawmakers were quick to respond by drafting and passing legislation to make the tolling partnership happen.

Under a series of three bills, the partnership (Bay City and United Bridge Partners) would be allowed to charge Bay City residents a 50-cent-per-crossing fee or a $15 monthly fee for unlimited passage over these bridges.

Non-residents would be charged $2 for individual crossings. City-owned vehicles, emergency vehicles, school buses, and individuals living below the poverty line would be exempt from the payments.

The agreement with United Bridge Partners requires no local, state, or federal taxpayer money. Further, these bills would allow other cities to enter into future tolling agreements, where feasible. SB 1215 amends the Home Rule Act to allow cities with Bascule bridges (an additional six cities) to enter into public-private partnership (P3) bridge projects for up to 75 years with tolls. The legislation also requires that any future P3 agreements would have to protect the public interest and ensure accountability to the city.

SB 1216, one of the series of bills passed to address Michigan’s limits on these projects, changes the statutes relating to how counties approve of bridge projects, SB 1217 ensures that public bridge authority P3s are exempt. from the collection of taxes, and SB 1218 changes state law to allow a public bridge leased by a concessionaire is exempt from taxes.

Importantly, these bills adopt several principles of value-added tolling so drivers don’t feel taken advantage of. For example, they say revenue from the tolls can only be used on that bridge or tolled facility, and drivers can be charged only enough to cover the capital, maintenance and operating costs.

Experience in other states suggests a lot of drivers’ opposition to tolling occurs when they think the tolls they are paying are being diverted away from the road or bridges to non-transportation purposes. By adapting these value-added principles, drivers and truckers can have more confidence that tolls will be used efficiently on that road or bridge.

Together these four bills show that Michigan lawmakers recognize the need to rebuild infrastructure and see tolling as a revenue source to help meet the state’s transportation needs. The Michigan Senate is set to send this package of legislation to the governor’s desk and she will have until just after the new year to sign them.

If Gov. Whitmer signs the bills it will open the door to an important tool that can help other municipalities affordably and sustainably finance much-needed road and bridge improvements.

A version of this column previously appeared in Bridge Magazine