As roads, water pipes, and bridges across the state begin to crumble the question of how best to maintain infrastructure, and who is going to pay for it, has become increasingly pressing.
Lance Binoniemi is the Vice President of Government Affairs for the Michigan Infrastructure and Transportation Authority, which represents over 600 construction companies statewide.
Ben: What are some of the trends we’re seeing in infrastructure and particularly around privatization?
Lance: As funding for infrastructure across the country has laxed over the past several decades a lot of states and even the federal government are looking for unique was to find financing to do construction projects for infrastructure. One of the ways that they’ve found are p-threes, or private public partnerships. There are a variety of ways that p-threes work but the most common one is where there is a financier, a private entity, that will pay for the infrastructure and then owns whatever piece of infrastructure there is and then will collect whatever revenues of however that infrastructure is being maintained and is being constructed.
Ben: Are there some side effects from privatizing bridges and roads. What happens when we continue to hand the job of infrastructure over to private companies?
Lance: There are some potential risks involved. Private companies, you are absolutely right, are not doing it out of the kindness of their heart. They need to recoup their investment or even further their investment by increasing their revenues. There is a give and take between the owner agency and the private company coming in to offer this service.
I think the once false risk that is out there is that they are going to own the road and do whatever they want with it once the private company gets their hands on it. There are still restrictions on what they are able to do on those highways and bridges where they may have a p-three partnership in place.
Ben: It seems widely understood and pushed for and hoped for that we need money behind infrastructure. Why aren’t we seeing it?
Lance: I think there is a perception out there by the public that we are already spending enough on taxes that there should be enough money in our state budget to cover all of our infrastructure needs. Unfortunately in Michigan we only prioritize about 6 percent of our overall budget for our roads and bridges. Compared to other states in the midwest they are all right around ten percent, I believe there is only one state that isn’t at ten percent and they are at nine percent. We inadequately funding infrastructure and I think it's because we’ve made other issues in the state a priority. I think we need to make infrastructure a bigger priority in Michigan.
Ben: What for you is the sweet spot for getting better infrastructure and finding ways to pay for it?
Lance: When it comes to the infrastructure in Michigan there was recent legislation that passed in 2015 that will increase revenues to about 1 point 2 billion each year. Our roads and bridges will be better maintained than they are currently.
But at MITA we always support user fees. Those individuals who use the roads and travel on the roads and do more damage to those roads should pay more. Those who use it less should pay less. We always advocate for increased user fees, a gasoline tax or a registration fee increase. Those are in our opinion the simplest and most purest form to raise money for infrastructure.
Ben: Anything else?
Lance: Again I think whatever the financing scheme is that the state wants to adopt or even a local municipality I think that whatever the solutions are we’ve really underinvested in Michigan and our infrastructure is a direct result in that. You look at our underground water and sewer and you see some of the problems that we’re having with that you know most communities haven’t invested in those areas in decades and the state hasn’t invested in those areas in decades.
For roads and bridges we haven’t increased revenues since 1994. This 2015 increase is going to help out but we’re seeing a direct result in the lack of funding because of our poor roads and our bridges and our poor underground infrastructure as well.
Ben: Thanks Lance I appreciate you taking the time.
Lance: Sure.