Editorial: Rising road costs will put Michigan farther behind
The Detroit News
Published 11:00 p.m. ET April 20, 2022
As the snow finally clears up and the orange cones return to roads around the state, Michigan Department Transportation officials are reassessing projects in its five-year plan due to rising material and labor costs. But waiting out inflation isn’t likely to pay off.
The state can’t delay necessary projects, and it shouldn’t bank on hopes that costs will eventually ease. Instead, Lansing should emphasize stable road and infrastructure funding.
It’s no secret that costs are up, which means the money the state has to work with will pave fewer 1niles of road than anticipated.
“Costs are coming twofold,” said Mike DeFinis, a director at large with the Michigan Infrastructure and Transportation Association, in a recent meeting with The Detroit News’ Editorial Board. “They’re con1ing in cost and it’s coming in time.”
“The lead time on key materials and products which traditionally would be one to two weeks are 14-16 weeks,” DeFinis said. “Cost increases are anywhere between 30% to 50%.”
The state usually anticipates a 4% inflation rate, but the agency has seen bids coming in at 10% higher than the engineer’s estimate since July.
MDOT officials are currently eyeing the agency’s future projects to see what can be scaled down or even delayed to combat inflation, as well as a scarcity of essential materials. The influx of federal infrastructure funds is increasing competition for those resources.
Instead of scrapping or downsizing crucial projects, MDOT should continue with its plan, argues Rob Coppersmith, executive vice president of MITA.
Coppersmith says MDOT should look at shifting project timelines to better assess where the state should be spending funds based on what resources are currently in short supply or delayed.
To stop crucial projects and wait for costs to come down could mean the state would be digging itself into a deeper hole, Coppersmith warns.
Passage of the $1.2 billion federal infrastructure bill fired a starting pistol for all 50 states to accelerate road work all at once.
That means resources like cement and gravel aggregate are in high demand, raising costs. That should have been anticipated, and the funding doled out in stages. It’s a lesson in how to spend massive amounts of federal dollars without fueling inflation.
For Michigan, which according to a 2019 infrastructure report needs an additional $2 billion a year to bring its roads into passable condition, the federal dollars will boost infrastructure improvement temporarily.
But long-term solutions are needed. Michigan is the only state in the nation that doesn’t commit its sales tax on fuel to road work. Instead, the money goes into the General Fund to pay for schools and local community needs.
Dedicating the fuel sales tax to roads would give the state roughly $900 million more annually to work with.
The rest of the necessary funds would have to come either through a gasoline tax hike or higher registration fees.
It’s a tough choice, and one Michigan has put off for decades. But with inflation eating away at existing resources, the state and its motorists must accept the reality that good roads will require sacrifice.
