Legislation could bring $1B in transit funds to metro Detroit over decade

  • Transit advocate says the legislation could be ‘transformative’, sending $1 billion in transit investments to Detroit over the next decade.
  • The proposed level of spending could help attract federal grants and fund projects like bus rapid transit on Woodward or commuter rail between Detroit and Ann Arbor.
  • But the legislation ties transit funding to billions in business subsidies that some say have done little to grow Michigan’s economy and have often attracted low-wage jobs.

Proposed legislation could dramatically boost Michigan transit by providing $2 billion over the next ten years to fund projects like bus rapid transit and commuter rail, which have often seemed out of reach in a state dominated by the auto industry.

“This long-term plan includes the largest sustained investment in transit in Michigan history,” Rep. Jason Morgan (D-Ann Arbor), a bill co-sponsor, said on X.

Yet the proposed legislation, introduced last week, ties transit investments to an extension of economic development funding under what is being billed as the Make it in Michigan fund, previously called the SOAR fund. The program has attracted criticism for spending large sums of money to attract what have often been low-paying jobs. 

Transit advocates and many lawmakers say the deal is too good to pass up, while others are wary of providing more subsidies for big business.

The legislation would extend incentives for businesses due to expire next year by another decade, providing $2.5 billion for companies investing in the state. This represents a 50% reduction from the current annual spending on the SOAR fund, although it effectively grows the total spending by extending it over ten years.

The new legislation sets aside money for investments in transit, housing and community projects such as childcare. Michigan transit and mobility projects would receive $200 million a year, while housing and community projects would receive $100 million and $50 million, respectively. A new board, the “Transformational Projects Authority,” will award grants for the transportation projects. 

Rep. Dylan Wegela (D-Garden City), said giving taxpayer money to wealthy corporations in order to secure public transit creates a set of “false choices” and that he would prefer to see lawmakers vote on  standalone public transportation legislation.

“I just don’t believe that public dollars should be subsidizing millionaire, billionaire and shareholder profits,” he told Planet Detroit.

Many House Democrats signed on as co-sponsors for the Make it in Michigan Fund bill, but with Democrats holding slim majorities in the State House and Senate, Wegela’s opposition could be significant.       

Republicans have also expressed skepticism about funding subsidies. House Minority Leader Matt Hall (R-Richland Township) previously criticized the SOAR fund for creating low-wage jobs and James M. Hohman, director of fiscal policy for the Mackinac Center for Public Policy, a free market think tank, said business subsidies were doing little to increase employment.

Gov. Gretchen Whitmer hasn’t said whether she supports the legislation. In a statement to Planet Detroit, Stacey Larouche, the governor’s spokesperson, said, “Like any legislation, we will review it as it moves through the process.”

Making reliable Michigan transit a reality

The legislation could bring in around $1 billion to Detroit over the next decade, according to Megan Owens, executive director of the nonprofit Transportation Riders United. She based her estimate on  population and current transit ridership.

“It could really be extremely transformational,” she said. “There’s so many projects that people have wanted to see happen for many years.”

Owens said this funding could advance projects like bus rapid transit between Detroit and Pontiac on Woodward Avenue, which could be fast enough to compete with commuting by car, commuter rail between Detroit and Ann Arbor, and a rail connection between Detroit, Lansing and Grand Rapids. She said the funding could have a multiplier effect by helping to make the region more competitive for federal grants, further expanding Michigan transit options.

Owens also echoed remarks made by lawmakers that emphasized the connection between economic development, transit and housing.

“Economic development, when done right, needs to be about more than just checks to companies to build a new factory,” she said. “It’s about creating vibrant places that people want to be, and people can afford to live in and get around in.”

She noted that pairing public transportation and housing investments could boost density, or the number of people living in a given area. This along with transit itself is an important strategy for reducing transportation emissions.

Is extending corporate subsidies worth it?

Wegela told Planet Detroit that Michiganders have paid too much for business incentives to justify the supposed benefits. He said the legislation would mean lawmakers had set aside around $6 billion for corporate subsidies over two years. He expressed little confidence that the state would reap a return on that investment.

“The companies hardly ever meet their end,” he said. “The returns on investments are astronomically low.”

For example, between 2002 and 2006, Michigan taxpayers spent $110 million on General Motors’ expansion of plants in Ypsilanti Township and Warren. By 2009, GM had closed the Ypsilanti Township plant, and the Warren plant closed in 2019.

Much of the money Michigan has spent on subsidies has gone to create manufacturing jobs with relatively low wages. In 2023, Michigan spent $335 million to create roughly 11,000 jobs, paying around $30,000 per job. Forty percent of these jobs paid less than the state’s median base wage of $45,510. Two of these projects were in Detroit, drawing on $6 million in state investment to help create around 500 jobs.

Legislation passed by the Michigan Senate in March added requirements to the SOAR fund requiring companies receiving subsidies to provide 250 new jobs with a median wage at or above 150% of the regional median wage or 50 jobs at 175% or above the median wage.

Still, Wegela said he believes, based on his conversations with constituents, that there is little popular support for more subsidies.

Polling seems to support this. In a 2019 poll from the progressive advocacy nonprofit Progress Michigan, a majority of Michiganders opposed tax breaks for big business, with 57% of respondents saying corporations and wealthy individuals should pay more in taxes, not less. 

Wegela said that lawmakers could choose to fund transit another way but are unwilling to do so.

Owens sees things differently. Having spent two decades advocating for transit in Metro Detroit, she said that tying transit to subsidies is a “necessary evil” to make substantial transportation investments a reality.

“The state of Michigan has never considered anything nearly this bold in transit investments,” she said. “And to be honest, I don’t see the governor and some of the more moderate legislators getting behind this type of transit investment in any other way.”

This article first appeared on Planet Detroit and is republished here under a Creative Commons license.

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