fedgazette

Economic and political uncertainty make for tense waiting game in Upper Peninsula

Michigan State Roundup

Published December 1, 1990  |  December 1990 issue

With the statehouse in Lansing changing hands, from James Blanchard to Gov.-elect John Engler this January, officials say it is almost impossible to analyze how statewide fiscal tightening will affect a particular region like the Upper Peninsula (U.P.).

"We won't know for sure until the state of the state speech" in early 1991, says Richard Anderson, director of the Northern Economic Initiatives Center in Marquette. "Right now it's status quo."

But that could change quickly. Michigan's Department of Management and Budget had earlier directed state agency heads to prepare two separate budgets for the next fiscal year, one matching current spending levels and one incorporating a 10 percent reduction.

One factor, of course, that will affect Michigan's plans, is the continuing crisis in Kuwait, a crisis that may ultimately impact the U.P. more than the rest of the state. U.P. county officials had been counting on an increase in the state's gas tax to finance road repair and construction. But with the recent increases in gas prices due to the Kuwait crisis, and with Gov.-elect Engler's stated opposition to an increase in the gas tax, U.P. counties may be left wanting.

It isn't as if they're fond of higher gas taxes (Michigan's 15-cent gas tax was last raised in 1984), but U.P. officials say that their region is dependent on the tax to receive an adequate allocation of funds for an important part of their life—their roads. Though sparsely populated, U.P. counties have a large road system that benefits, among others, the mining and forest industries—the economic lifeblood of the region. Since the state's gas tax is distributed from a statewide pool, without regard to population, the U.P. has always received necessary funds.

Rising costs for snow removal, road repairs, equipment replacement and insurance for employees—not to mention new-road construction—may mean a reduction in services in the near future, officials warn, with the greatest cuts coming in smaller U.P. counties.

David Fettig

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