Michigan Fails to Invest in Infrastructure

“By the Numbers” is a series of short articles evaluating the finances of Michigan local governments, primarily through the use of U.S. Census reports on Local Government Revenues and Expenditures by Type of Government, and State and Local Government Revenues and Expenditures. These articles look at how Michigan compares over time to the rest of the nation.

Several articles have benchmarked changes in revenues for local governments comparing the years 2002, 2007, and 2012. Changes in revenue collections, as well as transfers from the State and Federal governments, have been evaluated for each type of local government in Michigan – municipalities, counties, townships, and school districts. Another installment looked at two distinct types of own source revenues: taxes and fees.

Later articles benchmark Michigan’s state and local expenditures on various categories of services on a per capita basis as compared to other states, using information from 1992, 1997, 2002, 2007, and 2012. Expense categories analyzed include payroll, administrative costs, public safety, K-12 education funding, as well as natural resources and parks and recreation.

Finally, overall results will be evaluated with a critical look at Michigan’s current system of funding local governments and the services they provide.

Infrastructure is the foundation upon which economic development is built. Our road, sewer and water systems are the basic services that allow metropolitan areas to operate and which connect our economy with the rest of the world. Unfortunately, they are also one of those things that once built has a tendency to be underfunded, especially when there seems to be more pressing financial needs. In Michigan that would seem to be the case for the last twenty years.

In combined state and local government spending, Michigan was dead last in the nation in per-capita construction expenditures in 2012. While major projects can be put on hold for a short time due to budget constraints, Michigan’s history on expenditures for capital outlay have never been impressive. In 2007 Michigan was 48th in the nation in overall capital outlay expenditures; Michigan’s high point was in 2002, when the state was 35th in this category. In 1992 and 1997 Michigan was ranked 46th and 44th in the nation in investing in itself.

Michigan has recently enacted laws that will increase our investment in our road system in our state. Michigan has traditionally been ranked either last or near last in per capita expenditures in this area over the past two decades. When fully implemented, the new funding proposal will add approximately $1.2 billion per year to road expenditures compared to 2012. If all of this additional funding is expanded in capital projects Michigan would move up from last in the nation in investing in our roads to 39th. Of course, this revenue is phased in over 5 years and the higher ranking is based on the assumption that the other states that Michigan passes will not see any increase in expenditures on their roads over that period of time.