CHICAGO - Gov. John Engler of Michigan yesterday signed into law legislation to overhaul the state's infrastructure.
Engler administration officials said the state would not issue any of the $1 billion of revenue bonds authorized by the package, saying the state would not be able to spend the money fast enough.
Michigan has until Sept. 30, 1997, to issue the bonds, which would be backed by $1.2 billion of federal funds the state is slated to receive over the next six years under the new federal transportation act and from other sources.
The state has already issued $260 million of bonds backed by gas taxes and user fees in July as part of the governor's $5 billion, 10-year Build Michigan program to overhaul the state's roads and bridges. House Democrats added the $1 billion of additional bonding to the Build Michigan bills to speed up the program and create new jobs.
But Nick Khouri, the state's chief deputy treasurer, has said the state takes a conservative approach to debt and did not anticipate more bonding for transportation over the next three years.
The governor yesterday signed three bills that in addition to the bonding allow for tax changes and other measures needed to fully implement his Build Michigan program.
Meanwhile, the Michigan House is considering another wig bonding bill. This one would allow the state to issue up to $800 million of general obligation bonds to finance public school improvement projects.
Proceeds would be deposited in the Michigan Education Infrastructure and Technology Bond Fund, which would be created by the legislation. The bonds would be paid off with appropriations from the state's general fund.
Political observers said the bill, which is sponsored by state Rep. David Gubow, D-Huntington Woods, is unlikely to pass this session. However, he predicted it would be reintroduced during the next session, which begins in January. The House is adjourned until Nov. 5. Gubow could not be reached for comment.
If approved by the state Legislature and the governor, the measure would be placed on the ballot because Michigan law requires voter approval for GO debt. But Engler administration officials have said the Republican governor will not support the bill, calling it an election year package promoted by Democrats.
Robert Maxfield, superintendent of the Berkeley School District in the suburban Detroit area, said the measure is needed to minimize the increase in property taxes that would be required to pay off bonds to finance improvements. The school district asked Gubow to draft the legislation.
"With our already high millage, trying to go to the public with a bond issue that would require several more mills would be difficult," Maxfield said.
He added that the legislation was modeled after a $1 billion bond proposal currently pending in the House that would benefit higher education institutions.
That proposal, sponsored by House Democrats in conjunction with the $1 billion bonding plan for transportation, calls for issuing $500 million of GO bonds for maintenance projects at state universities and community colleges. Another $500 million of GO bonds would be sold to finance construction of new facilities and develop technologies in telecommunications networks, solid waste and recycling, and improved sewer, water, and drainage systems.
