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State of the State Address 2020: Anyone Watching?

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Re: State of the State Address 2020: Anyone Watching?

Post by MWmetalhead » Sun Feb 02, 2020 9:52 am

Most Michiganders think the state has enough money for road construction.
Most Michiganders have never studied the state budget, nor have they compared our road budget to other cold climate states. The vast majority of those same people will (correctly) say the roads are in poor shape and more work needs to be done on them.
Bonds are not the answer. Where are the workers coming from?
I'd venture to guess the workers are coming from the same companies that already do roadwork across the state, maybe a couple outside-the-state firms, plus MDOT. Not exactly rocket science. An extra $700 million a year in road funding, while sizable, is not exactly transformational or unscalable. We're talking an additional 15% or so in annual road spending versus current levels.

My two main issues with Whitmer's proposal are as follows:
- No additional funding for local & county roads (which are BY FAR the roads in the worst condition in this state);
- The amount of total proposed borrowings (I would've been more comfortable with, say, $2 billion over three to four years). However, there is a potential mitgant that could come into play, which I'll discuss toward the end of this post.
I'll also add, in what world does it make sense, after a decade of responsible debt servicing, to take on MORE debt for the state?
Interest rates are dirt cheap - at least for now. Michigan has a AA issuer rating from S&P, which is an excellent grade. The bonds should be able to be issued with no discount.

However, $3.5 billion over five years is the equivalent of $350 in additional debt per Michigan resident. That's pretty significant for something that is more of a band-aid than a permanent fix.

Now, I will say this - $700 million a year in additional funding is probably a deal that could've been struck with the legislature. But Gretchen was dead set on $2 billion+ in new funding each & every year in the form of a big gas tax hike.

I understand that bond proceeds of this nature cannot be disbursed to local & county governments. OK, fine. How about the general fund dollars that are currently being spent on roads? If the $700 million/yr. in bond proceeds are spent on state roads, which as a whole are already in better shape than local & county roads, then I think revenue sharing from general fund proceeds to local & county governments needs to be increased considerably. The budget for 2020 is already done, so I guess that topic will have to wait until 2021's budget is legislated.

The fact counties and most cities only have two tools for road funding - handouts from Lansing & property taxes - is ridiculous. Counties should have the ability to raise revenue in other ways for roads, and they should NOT have to be reliant on Lansing for handouts!. All 92 counties in Indiana have income taxes. Ohio has county level sales taxes.

https://www.in.gov/dor/reference/files/dn01.pdf

ConclusIon:
Whitmer's proposal has multiple shortcomings but is better than doing nothing, It appears all $3.5 billion in bonds will not be issued all at once, which is a good thing. This will give the Governor and the Legislature time to negotiate a long-term solution, which ultimately may negate the need to fully issue all $3.5 billion in bonds.

I would've strongly preferred to see Whitmer's bonding proposal complemented with a revamped proposal for a long-term fix, but that element was completely absent from her speech, which disappoints me.

Also, her partisan rhetoric on the topic was disappointing. Evidently, she has forgotten that the State House Leader of her own party also strongly opposed her $0.45 per gallon tax increase proposal!


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Re: State of the State Address 2020: Anyone Watching?

Post by MWmetalhead » Sun Feb 02, 2020 12:01 pm

The bonds will probably be issued with a coupon at or below 3%.

Debt service - assuming a 20 year amortization - will probably be somewhere between $200 million to $250 million a year, and that'll only be true if & when the full $3.5 billion in bonds are issued. That's not a big number when viewed in the context of the full state budget.

State treasury & MDOT officials claim that by rebuilding that targeted roads properly within the next five years, savings from being able to forego repetitious repairs will at least equal (if not slightly exceed) the amount spent on bond interest. The claim may be dubious...just repeating what's been stated on the record.


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Re: State of the State Address 2020: Anyone Watching?

Post by MWmetalhead » Sun Feb 02, 2020 12:13 pm

The below presentation deck is a little over a year old, but I found the data within it to be quite informative nonetheless:

https://www.house.mi.gov/hfa/PDF/Briefi ... y18-19.pdf


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Re: State of the State Address 2020: Anyone Watching?

Post by Mike Oxlong » Sun Feb 02, 2020 5:33 pm

Regarding fixing the roads.
A tax hike would pass IF it only went to the roads.

The voters rejected Proposal 1 in 2015 because just over half of the tax revenue raised by Proposal 1 would of actually gone toward road funding. 40% would of went toward schools, the rest to revenue sharing with local governments, and other projects unrelated to roads. Yet it was being hailed as a "Fix the Roads" tax.

And the same with Whitmer's proposed tax hike. 40 percent Of Whitmer’s tax hike won’t support roads. Instead, it would replace current transportation budget dollars that would be redirected to pay for other state government spending.

I think if Lansing could come up with a tax that would ONLY go to fixing roads, it would pass.



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Re: State of the State Address 2020: Anyone Watching?

Post by audiophile » Sun Feb 02, 2020 7:07 pm

Stop it, stop it - you're making sense.


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Re: State of the State Address 2020: Anyone Watching?

Post by MisterT » Wed Feb 05, 2020 10:42 am

Gov. Whitmer gave a great speech, that is why they chose her to be the rebuttal to President Ass Clown's "speech".

Gov. Whitmer came up with proposals for road funding solutions (Synder and the GOP before Whitmer did zilch). The GOP controlled legislature is determined to make it look like Gretchen's big campaign promise to fix the roads is failing, when its because they refuse to work with her on a solution. I'm not saying they have to accept her proposal as is, I'm all for compromise, that is bi-partisanship, and the GOP has no interest in that.

Michigan does not fund its roads enough and they suck as a result, its that simple. Things cost money people! Just compare our road funding to other states. You can't complain if you are not for any solutions.



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Re: State of the State Address 2020: Anyone Watching?

Post by km1125 » Thu Feb 06, 2020 3:38 pm

MWmetalhead wrote:
Sun Feb 02, 2020 12:13 pm
The below presentation deck is a little over a year old, but I found the data within it to be quite informative nonetheless:

https://www.house.mi.gov/hfa/PDF/Briefi ... y18-19.pdf
If I'm reading that correctly, we've been adding quite a bit in funding to MDOT over the last couple years, much more than the ~$700M that we're talking about with the bonds.

I'd really like to see some data on efforts MDOT is pushing that makes more effective use of the billions that they're already getting.

I see a lot of $$$ going to contractors.... any tips on which ones to invest in, or are those ones all privately owned?? I imagine their margins will be looking even better for the next several years.



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Re: State of the State Address 2020: Anyone Watching?

Post by audiophile » Fri Feb 07, 2020 9:07 am

I hope you all enjoy Michigan's second season, AKA "construction".

What is not needed is more construction, it's more central road planning. Complete reconstruction often takes too long hampering traffic and delaying road repairs where there are really needed. You can't close two adjacent roads, ever! These dummies can't even get this basic planning right.

Roads can be ground up and repaved the same day, at least for asphalt. Often you only need to repave portions of roads where heaving or potholes have occurred.

High spots need to be ground off and cracks need to be resealed every spring and fall.

I seen roads that looked like patchwork quilt, but were smooth. This because they resealed them and filled and ran a roller over it, not just use cold patch. This was in New Brunswick Canada.


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Re: State of the State Address 2020: Anyone Watching?

Post by Rate This » Fri Feb 07, 2020 9:23 pm

audiophile wrote:
Fri Feb 07, 2020 9:07 am
I hope you all enjoy Michigan's second season, AKA "construction".

What is not needed is more construction, it's more central road planning. Complete reconstruction often takes too long hampering traffic and delaying road repairs where there are really needed. You can't close two adjacent roads, ever! These dummies can't even get this basic planning right.

Roads can be ground up and repaved the same day, at least for asphalt. Often you only need to repave portions of roads where heaving or potholes have occurred.

High spots need to be ground off and cracks need to be resealed every spring and fall.

I seen roads that looked like patchwork quilt, but were smooth. This because they resealed them and filled and ran a roller over it, not just use cold patch. This was in New Brunswick Canada.
After 25-30 years roads need to be rebuilt. If you make them out of concrete they’ll last longer. Those overnight road jobs don’t last very long.



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Re: State of the State Address 2020: Anyone Watching?

Post by audiophile » Fri Feb 07, 2020 9:30 pm

Concrete is ideal, but not where the roads are constantly salted.

https://www.askthebuilder.com/salt-damage-concrete/


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Re: State of the State Address 2020: Anyone Watching?

Post by MWmetalhead » Sat Feb 08, 2020 3:32 pm

I see a lot of $$$ going to contractors.... any tips on which ones to invest in, or are those ones all privately owned?? I imagine their margins will be looking even better for the next several years.
They are privately owned.

The problem with grinding & resurfacing is the freeze-thaw cycle. Many road subsurfaces around these parts are near the end or beyond the end of their useful lives. Complete rebuilds are in order. Three or four years of pain from rampant construction would lead to many years of smooth driving.

Crack sealing would indeed be beneficial. Problem is - too many county road commissions are overwhelmed and underfunded.


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Re: State of the State Address 2020: Anyone Watching?

Post by TheForce » Sun Feb 09, 2020 9:55 am

According to this report, taxpayers will be paying for these bond for 45 years.

Now, didn't her plan to increase the gas tax .45 cents suppose to raise $3.5 billion? Either way she's getting $3.5 billion. That said, we'll be paying it either way and since she chose to go the bond route it will not fix local roads but had that gas tax been enacted it WOULD have covered local roads. Plus out of state motorists would be helping footing the bill.

https://mightymichigan.com/whitmer-borr ... lawmakers/



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Re: State of the State Address 2020: Anyone Watching?

Post by Rate This » Sun Feb 09, 2020 10:33 am

TheForce wrote:
Sun Feb 09, 2020 9:55 am
According to this report, taxpayers will be paying for these bond for 45 years.

Now, didn't her plan to increase the gas tax .45 cents suppose to raise $3.5 billion? Either way she's getting $3.5 billion. That said, we'll be paying it either way and since she chose to go the bond route it will not fix local roads but had that gas tax been enacted it WOULD have covered local roads. Plus out of state motorists would be helping footing the bill.

https://mightymichigan.com/whitmer-borr ... lawmakers/
And nobody took the offer so you kinda get what you don’t pay for... which is nothing.



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Re: State of the State Address 2020: Anyone Watching?

Post by MWmetalhead » Sun Feb 09, 2020 1:48 pm

According to this report, taxpayers will be paying for these bond for 45 years.
Incorrect - it's 25 years.
Now, didn't her plan to increase the gas tax .45 cents suppose to raise $3.5 billion? Either way she's getting $3.5 billion.
It would've raised $2.5 billion annually and in perpetuity (assuming gasoline consumption stays at current levels), of which $1.9 billion would've gone to roads.

The bonds are a one-shot deal, assuming the Governor doesn't try to get future bonding requests approved. Granted, the bonds will likely be issued in strips over a multi-year period since the full $3.5 billion cannot be used all at once.

You are correct as to the drawbacks, of course. Non-residents won't share in any of the burden, and no money from the bonds will go toward upkeep or repair of county and municipality-maintained roads.


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