Talking Michigan Transportation

Panel of experts sheds light on transportation funding battle

• Michigan Department of Transportation • Season 7 • Episode 237

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On this week’s Talking Michigan Transportation podcast, a conversation recapping a Sept. 4 panel discussion in Lansing featuring a thoughtful discussion among experts from various fields on the need for sustainable transportation infrastructure funding and why it’s such a challenge.

John Peracchio, who helped organize the event and moderated the discussion, says he was pleased with the comments of the panelists but hoped for a more robust question-and-answer session that followed.

Some key themes:

  • Chad Livengood, politics editor and columnist at the Detroit News, talked about reporting when he was at Crain’s Detroit on subdivisions being built in outer-ring suburbs with no sustainable source of funding for their roads.
  • Lance Binoniemi of the Michigan Infrastructure and Transportation Association reiterated the job losses that would result from a lack of increased investment in road and bridge building.
  • Baruch Feigenbaum of The Reason Foundation explained the long-term benefits of switching to a road user charge (RUC) system for funding roads, as some other states have piloted. He has previously talked about the topic on the podcast.
  • Jane McCurry of Clean Fuels Michigan provided perspective on how fees on alternative-fuel vehicles contribute to the road funding mix.
Jeff Cranson:

Hello, welcome to the Talking Michigan Transportation Podcast. I'm Jeff Cranson. This week, a panel convened in Lansing to talk about what else but a road funding deal. What to do? What can be done? How did we get here? Why are Michigan's roads and bridges facing yet another cliff, meaning without significant investment, the deterioration is going to be really bad. Some very scary data was shared on that front and what the pavement projections look like without more investment.

Jeff Cranson:

So, I spoke with John Peracchio, who helped organize this panel and moderated the discussion. He was an original member and co-chair of the Council on Future Mobility and then, when that was reconstituted as the Office of Future Mobility and Electrification, he became an advisor to that group. He has a long history with things related to mobility and transportation and had a lot of interesting things to say, asked a lot of good questions on the panel, which included some very thoughtful people from various disciplines. So, I hope you enjoy what John had to say to recap that panel and what his takeaway was. So, John Peracchio, as I mentioned before, has been a regular guest on the podcast.

Jeff Cranson:

I first got to know John when he was a co-chair of the Council on Future Mobility. In the previous administration he stayed on as an advisor, helped stand up what was the reconstituted Office of Future Mobility and Electrification. I always enjoyed talking to him. Today, like I said in the introduction, I really want to talk to him about a panel that he helped moderate, helped organize and moderate of people from different points of view, different backgrounds, about the road funding crisis. And it really is a crisis in Michigan. It has been for a long time. It seems kind of odd to keep calling something a crisis when it's been around for decades, but that's really an accurate term. So, John, thank you, as always, for taking time to do this and being generous enough to share your views.

John Peracchio:

Happy to do so. I think it was a very engaging discussion we had with there were probably half a dozen legislators and some staff folks this morning, and I think it was, as I say, a good discussion. I'm not sure we actually moved the needle in terms of getting folks to really focus on, you know, as you put it, the crisis. And, by the way, the crisis transcends roads. It includes, of course, as you know, bridges, it includes local roads and it includes public transportation. We really need to understand what kind of transit systems we would like in our state, and so, for me, it's an all-encompassing challenge the funding issue for transportation.

Jeff Cranson:

Yeah, and before we talk more about what came out of today and your takeaways and both of our observations, you've always had a real passion for transit and a belief, I think, a social justice belief that everybody deserves mobility. But talk about your background, even before you were involved in the Council of Future Mobility, and what informs your views and really your passion for all things mobility.

John Peracchio:

Well, I'm an auto industry person, so I worked for a major tier one supplier for 10 years, and then I decided to go out on my own and start a consulting business in the intelligent transportation sector.

John Peracchio:

So that was, you know, at the time we defined it very narrowly as vehicle to vehicle, vehicle to infrastructure communication, highly automated vehicles.

John Peracchio:

And when we talk about highly automated, you know, the hope way back when was that we could provide accessible transportation to folks who were challenged with disabilities, and so the automation was to enable the disabled to get from point A to point B, and then, if you extrapolate from that, to providing folks with a very cost-effective way of getting out of neighborhoods that are not serviced by public transit today. That was another aspect that very much intrigued me, and at the time you know we're talking about 2007 when I decided to do this there were actually a lot of financial investors who were interested in the space, and so I had, you know, financial investor clients, and then I gradually morphed into having just strategic clients, and then I got more involved in different aspects of intelligent transportation systems, which include tolling, transit, fare collection systems and things like that, and so it just kind of moved. You know, when I look back it seems jarring that I kind of went from one thing to the other, but in fact it was seamless to get involved in various aspects and across transportation modes.

Jeff Cranson:

So I will bring this back to the topic of the day, and that's the discussion about funding. But because you mentioned transportation for people with disabilities and the promise that automation promises for those, I think one thing that's often overlooked and I've tried to emphasize it over the years, and our former director, Kirk Steudle, has, and you have too, In fact, I wrote some testimony for the former director before he went before a subcommittee in Congress, and one of the things I highlighted was the difficulty most of us face having that conversation with our parents or another elderly loved one about taking the keys away, and there's nothing that says independence more than being able to drive your own vehicle when you want, where you want, and that's one of the things that I think automated if we ever get to truly autonomous vehicles promises. But there's also a funding component there, I think, in that you could maximize capacity by doing that right and you might not need as much or need to build more, which obviously would save money on infrastructure in the long term.

John Peracchio:

Well, there are so many opportunities to scale various transportation modes and then avoid bluntly congestion, because you've got more folks sharing rides and using a public transit system. And oh, by the way, a lot of us are very interested in combating climate change and reducing emissions associated with transportation. I'll tell you, I can lower our carbon footprint a lot faster by simply getting folks on an internal combustion engine bus versus individuals driving their own ICE vehicles. And so, to the extent that we can invest in public transportation, we actually can help the environment. We can provide reliable personal transportation to folks who otherwise wouldn't have it, and at a very efficient price.

Jeff Cranson:

So, we didn't talk about this much today, but where do you think we are in terms of moving toward more automated features and eventually, you know, autonomous vehicles? Are we, has the pace slowed? Are we still getting there? Are various components of the industry still moving in that direction?

John Peracchio:

Clearly they are, and the technology is evolving very, very quickly. I'm always cautious, however, at predicting precisely when we will get to what are called the SAE higher levels of automation, especially when you're talking about levels four and five. Level three, I think where the driver has to be available if the vehicle says, hey, we need your help, I have to wear my lawyer hat and say that's not a good place to be, given our current tort system. That's not a good place to be given our current tort system. But that technology is out there, it's being deployed in other parts of the world, and we'll have to see how that works but right now you know when I see YouTube Waymo's and other so-called fully autonomous vehicles running into telephone poles and running red lights. I think we need to maybe take a little longer to deploy those at scale.

Jeff Cranson:

Yeah. So let's bring it back to today's discussion. What's your overall takeaway? Were you pleased? You know, in the panel mention it was. It was a very thoughtful group. You had, uh, you know, a media person who's been covering this for a long time. You had somebody representing the contracting industry, the road builders who do the work, who's also been at this for a long time, talking about this. Uh, probably as long as I have. You had somebody representing clean fuels and what the potential is for alternative vehicles and how that factors in to funding, certainly. And then you also had somebody from the Reason Foundation to talk about vehicle miles traveled, or road user charges, which is, I think, becoming more of the common term. It's also called mileage-based user fees. I think one thing that might help us get in that direction is to just agree on a term. But it was a very, very good panel, very thoughtful discussion. But I want to know what you came away with.

John Peracchio:

So, first of all, thanks to you and to the administration for helping to identify and to recruit the panelists I couldn't agree with you more we had a really good set of inputs, both from a data perspective and from an individual understanding of what the problems are and what the potential solutions are. So, from that perspective, I was extremely pleased. I think the Q&A, though, was more compelling for me and maybe not quite as positive. I detected from legislators' frustration, and the negativity is not about their particular positions on some of these issues that we discussed. Rather, it's the frustration that they know there's a problem and it's very difficult politically to get to a reasoned policy option to solve that problem. And maybe you know I'm a little jaded because I am not I've not been around state government as long as you, but I have since I was, you know, kind of thinking about this this morning since 2017, when Governor Snyder appointed me to co-chair the former Council on Future Mobility. It is a difficult thing to work through for two houses of the legislature and an administration that's on its last legs in terms of timing.

Jeff Cranson:

Yeah, that's definitely part of the discussion is term limits and the need to re-educate people. We got a little bit of a reprieve with the legislation that altered the term limits law, but we still have those challenges, trying to start from scratch with a new batch every couple of years. One thing I was hoping would resonate, and I don't think it did. So much of the discussion is about how we can save money. How do we not spend this money instead of flipping that around and viewing it as an investment and the economic development imperative of that? We touched on that some, but I just don't think it breaks through enough.

Jeff Cranson:

I've told you the story about a longtime person here in Grand Rapids who used to be the president of the Right Place Economic Development Group, similar to Ann Arbor, spark or Southwest Michigan First or countless such groups around the state and she told me a horror story once about a potential business person. Flew into town just a couple miles from the airport and said, man, if this is what Michigan's roads look like, no thanks. And you know, went back to the airport and left. I don't know how to make that breakthrough to people, the policymakers that are making these decisions, that this is not just money you're throwing at something. This is an investment. This is not just jobs for building the roads. It's jobs that are supported by building roads.

John Peracchio:

So I completely agree with you. I was disheartened by the talk about taking money from waste in state government and applying it to the roads, without naming who is actually articulating that. I mean, to me that's just like shuffling deck chairs on the Titanic. Ok, we have to, you know, reroute around the iceberg. We can't, we can't, just be fussing with what's on deck when we see this big iceberg headed our way. This big iceberg headed our way and to your point about, you know, economic development.

John Peracchio:

If you will recall, when Amazon was evaluating southeastern Michigan for HQ2, right at the top of the list of things that they came back with in terms of explaining why they chose not to locate in our neighborhood was the lack of a reliable, integrated public transportation system in southeastern Michigan. So, it's a great example of, you know, the roads need to be. We need to invest in the roads, we need to invest in our bridges, we need to invest in public transportation in order to attract and retain both businesses, economic activity and people. The talent is just as important as the businesses that we attract to the state of Michigan, and it's a sad fact that many folks who go to our fine and we've talked about this go to our fine institute. We're blessed in Michigan with some of the best institutions of higher learning in the world. Okay, and every single year when folks graduate from these places, they leave the state of Michigan to go someplace else.

Jeff Cranson:

Yeah, that's absolutely right, and I think that it isn't just the person that's thinking of relocating a business. It is that talent that says look, I could get a good job and buy a really cool condo in Corktown, but you know I have to drive on roads that look like Beirut and you know how much fun is that.

John Peracchio:

Or what if you just don't even want to drive?

Jeff Cranson:

Well, right.

John Peracchio:

A lot of young people today, especially the cohort that's graduating from, you know, an undergraduate program and even graduate programs. They want to live in a world where they don't have to drive. Now, I'm from Detroit, was born in Detroit. I want everybody to have a car. I think that's just wonderful. The problem is both new and used vehicles right now, at the price points that are, you know, out there, on average they're beyond even people, two, three, four times above the federal poverty level. When you're looking at that equation, you have to provide an alternative for folks to get from point A to point B, or they're going to go live someplace else.

Jeff Cranson:

Yeah, no, I think we focus a lot rightly, as we should on housing and the cost of housing, but you make a really good point that that student graduates and maybe drives the, you know late model car that their parents handed off to them at some point. But are they going to have a job that allows them to buy a new car when they need to, or even a decent used car? I think you make a really good point. We'll be right back. Stay tuned.

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Know before you go, head on over to MyDrive to check out the latest on road construction and possible delays along your route, for a detailed map head over to michigan. gov/ drive.

Jeff Cranson:

Talk a little bit about what these pavement numbers mean. You kind of became familiar with it as you looked into it and you set it up in your intro very well, and I always submit that we need to do more to help people understand what it means to have good pavement or poor pavement or fair pavement, because unless you can show them a visual or, better yet, put them in a simulation theater where maybe your seats shake based on, say, you're driving down this kind of road. I was talking with Tim Lemon, our pavement specialist, on the way back from the panel this morning about how I wonder if we should come up with a cup of coffee measure At what level pavement can you drive and not spill your coffee. Basically, and poor means you're going to spill your coffee and I think probably what resonated most it popped out at you was that by 2030, we could be at 50%. Is that your memory?

John Peracchio:

Yeah, no, you're exactly right. But I mean, the killer were these two data points, which is okay if you want to settle for just 10% poor pavement, you're looking at $25 billion over the next 10 years, so that's $2.5 billion per year. And so we're going to tolerate spilled coffee. And somebody made the point about vehicle repair costs going through the roof because of our poor pavement. So for 10% poor, you're talking about a $25 billion bill over 10 years. But let's say we don't care that much and you know coffee's cheap and we like to encourage our repair shops, so we'll settle for 30 percent poor. That's still talking about 13 billion dollars, or 1.3 billion per year. That we don't have right now. Ok, and that would result in the state maintained routes having the worst pavement condition in the last 30 years. Now you just, you know, sort of think about that for just a nanosecond and you go wait a minute. What kind of a transportation world do we want to live in in Michigan?

Jeff Cranson:

So one thing that Chad Livengood, who was our media person on the panel, he's written extensively about and you asked him about this and I wonder this is probably something that occurred to you before, but maybe this put a finer point on it for you when he talked about the, I guess the proliferation of developments in townships and exurban suburban areas around the state that don't come with any plan for operations or maintenance for the roadways. We just take it for granted, right? I'm going to buy this house out here, of course I'm going to have roads that service it, and I equated it to you in a conversation to any given county building a new jail facility and raising the money appropriately enough to build it, but then not thinking about how they're going to maintain it and operate it in the future. And you know, did anything? Did you feel like you learned anything from that part of Chad's dissertation? I guess we'll call it.

John Peracchio:

Yeah. So, as an old real estate lawyer, I am familiar with the routine, right? So, the developers develop, let's say, a subdivision, they create roads and then they publicly dedicate them. Okay, and everybody thinks about that. Well, isn't that nice that the developer is just basically dedicating these roads to the public. But what brought it, you know, sort of in glaring focus were Chad's comments. Because, okay, now who takes care of that after this wonderful dedication to the public realm? And there's no plan. And that part I hadn't really thought of in a long, long time, if I ever thought about it. I mean, I knew the theory of dedicating public roads, but then, like, who's going to take care of it? Oh yeah, we forgot about that.

John Peracchio:

And then the other thing that leapt out at me from Chad's remarks was the crazy quote jurisdictional situation in terms of, you know, the state trunk line roads. Counties have some responsibilities, townships and cities, and it's all a crazy quilt of jurisdictions overlapping and a lot of times people are just blaming somebody else in various levels of government for not fixing something or not figuring out. You know what. We're going to need to do a millage on this if we really want our roads fixed. And that's the part that is very difficult to explain to people and that came out of some of the comments from the legislators, which I think they're valid comments. I mean, I think they try to explain stuff to their constituents and it can be very frustrating.

Jeff Cranson:

Well, it's very complex. I mean, most people don't know that we have more than 600 road agencies in the state. Is that necessary? When we talk about economies of scale and whether we could do things differently, some states have a broader jurisdiction and it's really not about anybody seizing power, it's just about getting more bang for your buck.

John Peracchio:

Well, and without taking a left turn here, look at how transit is organized in southeastern Michigan. Does that make any sense?

Jeff Cranson:

Same thing yeah.

John Peracchio:

Right, all right, and you've got Detroit DOT having its system, you have SMART having its system. The systems do not connect precisely and then you have an RTA, which is basically a funding and planning activity. It's not really an operating agency.

Jeff Cranson:

Yeah, it took a lot to just get establishing an RTA over the finish line and then, you know, coming up with a sustainable funding model. It still hasn't happened.

John Peracchio:

Still hasn't happened right.

Jeff Cranson:

I think that was 2012. So you know 13 years. We've got some time. Talk a little bit about what Baruch Feigenbaum of the Reason Foundation spoke about, because that's really in your wheelhouse. I know you're very interested with your background in tolling and user fees. Yeah, what was your takeaway from his input?

John Peracchio:

Well, bluntly, he provided the answers to the exam. If you want to use them, which is to charge folks based on how many miles they traveled, it's called a user fee and there are lots of kinds of technologies that can be used to do that that. Somebody raised the concern about privacy. It always comes up when you're talking about tracking folks in order to make a mileage-based user fee system work, and I answered that one with my standard question in reply, which is do you have a smart device on you? Is it on? And everybody always says, oh, yes, it is. And then I say they know where you are, get over yourself. And so, I mean I'm just not very patient with the privacy argument.

John Peracchio:

That said, it can't be dismissed out of hand. You have to educate folks on why you're doing something, what happens to the data. You can dump the data if you have a system that works. And then you focus on customer care, making sure that people who have their accounts to pay for the mileage-based fees are taken care of that. When there's a problem with an invoice or a problem with a payment, there's a system in place to handle those things and all of that needs to be a part of an education program to let folks know how this could work.

Jeff Cranson:

Yeah, well put. what else?

Jeff Cranson:

Anything else that you want to add that you came away with that maybe you didn't know, or that maybe reinforced something important about this, this discussion.

John Peracchio:

Well, I there was. There were no surprises for me, although I didn't understand the history of the dysfunction uh, that both Chad and director Wefric you know who made a great point. You know this is not this crisis and you, you talked about it earlier. This crisis didn't just creep up on us. It's been around for decades, right, and there's this horror's tale that Chad related to us about how someone tried this. It didn't work. Somebody tried something else and that didn't work. That, for me, was instructive, because it means it's a big challenge and so we have to have the best people we can find to work on it and solve the problem. And it's got to be a group effort, because the group broke it in the first place.

Jeff Cranson:

Yeah, Lance Benonimi of the Michigan Infrastructure and Transportation Association, the industry representative on the panel, said later, after Chad recounted the 2014 lame duck period when there was almost a true sustainable solution that would have really taken care of things for a long time, and it didn't get done. And they decided to go to the ballot. And I think it gave me PTSD too to remember that and how badly that failed because it would have solved a lot of problems. I mean no less than Rob Fowler of the Small Business Association of Michigan not by any means a liberal organization called that proposal elegant because of all the things that it would have solved and all the things within it, but it was very easy to break apart and to throw darts at for opponents because it was so complicated and, as you know, if somebody doesn't understand a ballot issue, they're going to vote no.

John Peracchio:

Absolutely, and that's actually the beauty of road usage charging, because it doesn't matter what kind of powertrain you have in your vehicle, it doesn't matter, you know where you go.

John Peracchio:

The system will work very simply on a per mile basis and if you drive to that awful place, Ohio, we won't charge you for that because we know you're not on a Michigan road, All right. So, the simplicity of road usage charging and what Baruch Feigenbaum outlined is that it's very fair and it does, and I talked about this a little bit it does offer policy options. If you want. If you want to calibrate the user fee based on income levels so that richer people pay more, you can do that. If you want to have different rates for different roads, that maybe some roads are more expensive to maintain, you can do that as well. So, there are policy options that really no other system offers, and what's happening today with the gas and the sales tax is it's very obfuscating in terms of where the funding is coming from and not necessarily clear where the funding is going.

Jeff Cranson:

So I've had this conversation with reporters over the years and I remember one talking about again, about comparing us to Ohio, and I said well, for one thing, they have a higher gas tax than just when Michigan raised theirs. Then Ohio raised theirs even higher and they spend a billion dollars more than Michigan does and that makes a difference. And $350 million is what they take in on the turnpike alone. And this reporter said to me well, that's just one road. And I'm like well, that's $350 million that you can spend elsewhere, that you don't have to spend on that one road, which is two signed interstates. At some points it's that busy of a route. So we'll keep talking about this, obviously, but I wanted to have you on because I thought it was a thoughtful panel. It was a good idea to do it, the timing was good, coming the day after a rally of all kinds of labor folks and industry types that descended on the Capitol like hordes estimates of 4,000 to 5,000 people and hopefully this will all lead to more discussion and maybe some significant solutions. We'll see.

John Peracchio:

Agreed. Thank you for having me, Jeff.

Jeff Cranson:

I'd like to thank you once more for tuning in to Talking Michigan Transportation. You can find show notes and more on Apple Podcasts or Buzzsprout. I also want to acknowledge the talented people who help make this a reality each week, starting with Randy Debler, who skillfully edits the audio, Jesse Ball, who proofs the content, Courtney Bates, who posts the podcast to various platforms, and Jackie Salinas, who transcribes the audio to make it accessible to all.