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Rep. Calley plan would limit governor’s ability to force taxpayers into debt to pay for roads
RELEASE|February 7, 2020

State Rep. Julie Calley, of Portland, this week introduced a plan offering Michigan taxpayers additional protections against unilateral executive action.

Gov. Gretchen Whitmer recently announced at her State of the State address her plan to borrow $3.5 billion through bond sales over the next four years to fund repairs for state-owned roads. The move was approved by the State Transportation Commission the following morning, swiftly creating substantial debt for Michigan’s future generations.

House Bill 5473 would change the amount of bonds and notes that could be serviced by the commission. Calley’s plan states debt service payments cannot exceed 10 percent of the total transportation revenue from the previous year, instead of the current 50 percent amount in Michigan law. The new interest requirements would mean less transportation revenue being diverted to required debt service, while also ensuring local communities do not lose out on needed funding each year.

“Regardless of whether a Republican or Democrat holds executive office in this state, we should be respectful to what Michigan taxpayers – as well as their children and grandchildren – can afford,” Calley said. “This corrective action will help make that a reality and protect an essential road funding mechanism for our local communities.”

According to some estimates, it is possible that the state could currently issue up to $8.5 billion in total bonds for roads without legislative approval, or $7.3 billion more in bonds based on current commitments that are still being paid down. Calley said Whitmer’s move sets a dangerous precedent.

“It makes you wonder if a time will come when $3.5 billion is dwarfed by another reckless bonding proposal,” Calley said. “Unfortunately, future generations in this state will be stuck with the bill.  Bonding is a long-term problem disguised as a short-term solution, and that’s what this plan will address.”

A House Fiscal Agency report from January revealed Michigan’s government still owed over $1 billion for road projects that were approved as far back as two decades ago – during both Republican and Democratic administration periods. An estimated $199.6 million in debt service was slated to be paid just in the current fiscal year alone.

HB 5473 has been referred to the House Transportation Committee for consideration.

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