The state of Michigan participates in a Federal-Aid Highway Program whereby federal funds cover 80% of highway project costs. The additional 20% of project cost is provided at the local level. The ratio of annual Federal-aid highway funds a state receives compared with the Federal highway user tax receipts (from users in that state) varies from state to state.
Often termed the “donor / donee” debate, the issue involves states that receive a greater share of Federal highway funding than their share of user taxes paid into the Highway Account (donee states). Meanwhile, some states receive a lower share of highway funding than they pay into the Highway Account (donor states). Michigan has historically been a donor state, contributing more money into the Federal Transportation Program than is received. From 2005-2009, states were guaranteed no less that 90% of their contribution, thanks to a 5-year transportation bill. Regardless, Michigan experienced a nearly $500 million net loss in Federal Highway dollars during the 5-year period.
If
Michigan continues funding transportation at the current level, in
2011 the Michigan Department of Transportation (MDOT) will be
unable to match all eligible federal funding; and Federal Highway
transportation funds could go to other states that can provide the
required match. In 2011, MDOT is predicting a loss of $475 million
in federal dollars if the state is unable to find $84 million in
matching funds. “We lose that amount of money, so our money is not
going to come back to Michigan; our money is going to go to other
states”, cites MDOT spokeswoman, Kari Arend.
From 2010-14, MDOT anticipates a total loss of 2.1 billion in federal aid if the department cannot dedicate $350 million in match money. The long-range plan is even bleaker. “By 2020, the share of state roads in good condition will drop from 90% to 25%”, says MDOT spokesman, Bill Shreck.
The U.S. House voted in December to exempt Michigan and a few other states from their local matching contributions in a new 154 billion federal stimulus package. The bill must still be voted on by the U.S. Senate and signed by the President. Even if the bill passes, Michigan legislators must increase long-term funding for roads and bridges, providing project costs not accounted for in Federal funding.