Michigan Proposal 1 – A New Take

Michigan’s Proposal 1 is a hot topic of discourse throughout the state. Intense debates rage between people on whether or not it is the best way to fix Michigan’s crumbling roads. However, the entire conversation misses the mark for what Proposal 1 really is.

Proposal 1 is not about fixing the roads: it is about addressing the system we have in this state for local government funding. When reading the text of the Proposal, as well as the legislation that would be implemented upon passage, road funding is only one component of what the Proposal addresses. That’s not to say that Proposal 1 would be ineffectual in helping to improve the roads – more revenue would be raised and certain contractor requirements would be codified into law. The biggest issue, though, that the Proposal seeks to address is how local units of government (city, county, and school districts) will be funded going forward.

Local government funding through state revenue sharing has been eviscerated ever since the financial crisis hit. Furthermore, dedicated sources of local government revenue have been increasingly moved to the state (Prop A in 1994 being one of the most noteworthy). Guarantees were made that local governments would be held harmless, but little was done to ensure that they actually were. Legislators have repeatedly cut disbursements to local entities and used the money raised from local levies to fund state-wide priorities.

When it comes to roads, many of the ones used by motorists fall under the purview of county road commissions or cities. Therefore, as local revenue sharing has been cut, local roads have borne the brunt of the impact. Localities have had to learn how to do more with less; while many have made great progress, there are limits to the amount of cuts that can be sustained before quality is adversely affected. The same issues plague education as well.

Proposal 1 creates a new dynamic in local government finance. It alters the structure of how money is raised at a local level and how it is treated in Lansing, the net effect being that more money is raised and dedicated to funding road construction/maintenance as well as education. It also seeks to mitigate the effects of increased consumption taxes (which are regressive by nature) through restoring the Earned Income Tax Credit in Michigan.

Therefore, the debate on Proposal 1 should not be about the roads – it should be on local government finance. People who support the status quo should vote no, while those who believe that the current system is flawed should vote yes. While ‘local government finance’ is a much more ‘inside-baseball’ issue, it has the intrinsic value of being an easier and more accurate way to frame the debate. This can help to alleviate some of the passions that have made this issue so contentious and help voters become better informed on what they will be asked to vote on for May 5th.

 

Posted on April 24, 2015 in Blog

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