SOUTHFIELD – Governor Rick Snyder called for overhauling how the state funds and maintains its road system Wednesday, to generate $1.4 billion in new revenue most say the transportation system needs. It could result in $120 more per year in vehicle registration fees.

Snyder’s plan delves into the three fundamentals of the system: where the money comes from, how it is distributed and who is in charge of spending that money. Mr. Snyder, in delivering his special message on infrastructure at Lawrence Technological University, which is developing new materials that can replace rebar, said the subject may not inspire the same passion as education or other issues, but it should.

“It’s what we take for granted,” he said. “And what we take for granted is slipping.”

As Gongwer News Service reported Tuesday, Mr. Snyder floated the concept of an increase in state vehicle registration fees to generate the $1.4 billion in new revenue most say the transportation system needs.

Snyder said he was not formally proposing a $120 per vehicle increase in the fee, which is set at 0.5 percent of the manufacturers suggested retail price, but called the idea a “worthwhile concept” and it certainly seemed that is his method of choice to raise the money. He also is framing the proposal as “$10 a month” although such fees are paid annually, not monthly.

Snyder also proposed, as Gongwer first reported Monday, allowing counties and regional authorities to levy a local vehicle registration fee to raise money for local transportation with voter approval required. The fee could not exceed an average of $40 per vehicle and would be collected by the state with the funds remitted to the local road agency.

And the governor, as expected, called for replacing the state’s 19-cent per gallon gasoline tax (and 15-cent per gallon tax on diesel fuel) with a tax based on a percentage of the price of fuel.

FUNDING FORMULA: The biggest item to emerge Wednesday were Snyder’s proposal to scrap the state’s basic road funding formula that determines the allocation of funds for roads between the state and local governments. Currently, most of the money in the Michigan Transportation Fund is allocated through a formula that directs 39.1 percent to the state, 39.1 percent to county road commissions and 21.8 percent to cities and villages although it is much more complicated than just those numbers.

Snyder displayed two charts showing visually how the money is disbursed that brought the infamous Rube Goldberg to mind for how convoluted the system is.

“As an accountant, I don’t even want to look at this,” he said. “This is not a good way to do this folks. There are better ways.”

Snyder said he is still working out the specifics of the new formula, but said it would put funding emphasis on roads with the heaviest traffic, the most lanes and traveling through commercial corridors.

“The highways and bridges that serve the most traffic should see the greatest new investment,” Snyder said. “Likewise, highways and bridges that carry the largest amount of commercial traffic should get the largest share of funding from those users. Roads that are most critical to Michigan’s economic future – roads that are important to shippers, or to a particular industry – will benefit most. Commercial carriers and truckers will see the results of their investment through the improvements on the highways they travel most.”

Snyder said he wants to shift from the current formula to the new one over a seven-year period.

The change Snyder is proposing almost certainly would mean less money for roads in rural and less developed areas, but Snyder, asked about that possibility, tried to assuage concerns.

“The funding should follow the traffic to some degree, but understand we’re a large state, so we cannot ignore the rural questions,” he said. “It’s to say instead of looking at it on political jurisdictions, shouldn’t we be looking at where people are actually driving.”

Of where his administration stands in proposing a new formula, Snyder said: “It’s still in the early stages. We’re doing some early modeling.”

Snyder also called for scrapping funding to those jurisdictions receiving less than $50,000 with the money reverting to larger road agencies although the funds would still have to be spent in the communities where the money formerly went.

ROAD COMMISSIONS IN JEOPARDY: The other surprise Snyder sprung was a proposal to allow counties, through their boards of commissioners, to adopt a resolution that would transfer the powers of county road commissions – separate entities that operate outside of traditional county governments – to the counties. That puts the 81 such commissions – Macomb and Wayne counties have no commission with roads duties under the auspices of their executive branch – at risk of extinction.

Snyder did not provide great detail on why he thought road commissions no longer necessarily serve a purpose, but seemed to view them as a relic. “They’ve provided a great function, but the world has changed,” he said. Overall, Mr. Snyder said Michigan has too many independent road agencies – 617 – and “can no longer afford to spread limited funding so thinly across so many small agencies.”

The governor also outlined criteria road agencies would have to meet as a condition for receiving state transportation revenue: development of an asset management plan for federal-aid highways and bridges, a safety plan, competitive bidding on contracts to any public or private sector organization, consolidation of services and the creation of online dashboards to measure their performance as well as a citizen’s guide to their finances.

Opening up bidding on projects would mean a huge change. “It’s free competition to let the best people succeed,” he said.

Snyder also sought to pre-empt criticism that former Governor John Engler had tried bidding out some road projects in a pilot program in the 1990s that was widely considered a failure.

“We’re older and wiser,” he said. “It’s worth trying again.”

VEHICLE REGISTRATION FEE: Snyder deviated from his tack this year of making clear-cut proposals in not directly calling for a specific way to raise $1.4 billion for roads.

Instead, Snyder mentioned one way to generate the funds would be to increase vehicle registration fees by $120 per vehicle. That would more than double the current $950 million raised by existing vehicle fees.

Snyder said the revenue would enable the state to go from having 68 percent of its roads in good or fair to condition to 81 percent.

“A tremendous difference for $10 per month for the average passenger vehicle, he said. “Without telling you that’s our proposal, I view that as a good starting point.”

Snyder said he floated the idea of the vehicle fee increase as a way to start the discussion on the issue.

Asked about the additional cost to motorists that a vehicle registration hike would mean, Snyder said it at least was a way for motorists to quantify what they are putting into the system, as well as a sustainable source of revenue.

“If you look in the immediate piece, it could be some additional costs,” he said. “But if you look over a lifetime, it could save us money.?

GASOLINE TAX CHANGE: Snyder also discussed his plan to replace the state’s 19-cent per gallon gasoline tax (and 15-cent per gallon tax on diesel fuel) with a tax based on a percentage of the price of fuel.

To achieve revenue-neutrality, the tax would have to be set at 6.7 percent of the price distributors pay for the fuel at the wholesale level from suppliers. Snyder said that figure could change though as his proposal moves through the Legislature. He also said a floor and ceiling on the amount of revenue raised by the tax would be established to guard against gasoline price spikes producing a windfall or drops causing a funding problem. And those par