How to Pay for $1 billion in Road Funding for Michigan Without Taxes

Last summer, I was working on a political campaign. The first month was spent solely talking to Democrats, during the second month we started talking to people our voter targeting software considered to be “persuadeable”. The first person I talked to in this regard was almost too good of a story to be true. He said “Yeah, I vote both ways or split my ticket sometimes. What I’d really like is someone that can pay for roads without raising taxes”.

It was a perfect encapsulation of politics today. Someone who wanted better public services, but didn’t want to pay for it. This is a really hard question to answer for many reasons. The biggest one is that the state of Michigan isn’t very wasteful with it’s money and its budget isn’t that big. Medicaid makes up 38% of state spending, but 76% of that is paid for by the federal government so if the state cut Medicaid spending by $1, they lose $3 in federal monies. Education makes up 18%, we already invest less in kids than nearly any other state. Pensions are another 15%, which have already been reformed and their costs will slowly go down. So the final 29% makes up welfare (7%), state police/prisons (4%), general government (7%), interest on the debt (2%), and then infrastructure at (7%). Data can be found here.

You can’t cut interest on debt, no one wants to cut police services, welfare is also partially federally funded, and general government includes things like parks services and child welfare administration. So where is there in the budget to cut spending to make up the difference for better roads? I thought I’d take a whack at it without raising tax rates on personal income, sales, or corporate income.

Under my roads proposal, the state government will take out a 30 year bond worth $30 billion. At a 5% interest rate, we would need $1.05 billion a year in cuts to pay off the roads over the course of 30 years. Let’s begin!

Eliminate Medicaid Work Requirements — work requirements are a popular idea, why should poor people get free medical care and not work for it? They don’t stop cheaters from abusing the system though and the administrative costs are immense. Kentucky’s Medicaid work requirement is expected to cost about $180 million per year, the Center for Budget and Policy Priorities states that administering the work requirements for a non-welfare program will cost the state about $30 million per year, so lets go with 30 million. ($30 million towards roads).

Crack down on wage theft — wage theft is when an employer willing decides to ignore overtime and minimum wage laws or even just skim their hours off the top. The Economic Policy Institute states that Michigan workers lose about $429 million per year in lost wages, if all of that was recovered then the state would absorb about 9% of that money in taxes. (lets round that to $40 million).

Marijuana — Prop 1, passed overwhelmingly in 2018 by ballot proposal will bring in about $50 million for roads.

Methane Flaring Limits — when pipelines transport fuel on state lands, they have to pay severance taxes, but they flare some of the gas due to not wanting to overload the pipelines. The technology is already there to limit the amount of methane emitted, but it’s expensive. If Michigan were to limit the amount of methane emitted and more gas and oil were transported then the state would see about $50 million more in severance tax revenue. ($50 million)

Raise airplane fuel taxes — the airplane fuel tax has been set at $0.03 per gallon since 1931. Let’s increase it to $0.09 cents per gallon! ($15 million).

Eliminate cash bail — cash bail is a policy that prevents poor people from getting out of jail and actually costs the state money. Eliminating it would save about $100 million per year by reducing administrative costs and jail/prison populations. ($100 million).

Raise water extraction fees — Increasing the cost to take millions of gallons of water out of the ground would force companies like Nestle to take the environmental impact of their work into account, bring justice to the environment, reduce the amount of plastic bottles being made and going to landfills, and bring in an extra $100 million per year in revenue ($100 million).

Increase state audits — spending money on tax audits costs negative money. For every dollar the government spends on audits, it brings in $4. Spending $100 million on new tax enforcement officers would bring in $400 million in revenue and cut the tax gap in half. ($300 million).

Eliminate tax deductions for oil companies — this is a small number, but it would reduce emissions by slightly increasing the cost of gas by eliminating a subsidy. ($10 million)

We failed! I only got to roughly $700 million a year in low impact revenue raisers and spending cuts. The point of this essay was to show how difficult it would be to fix the damn roads without raising taxes. Each of the above items could be turned up or down depending on how offensive you want to be to the people of Michigan and none of them would be palatable to Republicans anyway.

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Thanks for sharing this, you are awesome !

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