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Wed September 26, 2012
Will new bridge to Canada cost Michigan taxpayers? We ask a law professor
As election day approaches, you’re likely to see a lot of ads critical of an agreement between Canada and Michigan regarding a new bridge between Detroit and Windsor.
[Ad Clip:] “It will cost Michigan taxpayers $100 million a year.”
Whether Michigan taxpayers are on the hook for the cost of that bridge is at the heart of a fierce debate about the agreement.
This agreement between Canada and Michigan is basically a contract. Essentially it says Canada is fronting the money for the bridge, including Michigan’s costs to connect our highways to the new crossing. The money will be recaptured through tolls to cross the bridge.
The owners of the Ambassador Bridge want to stop the new bridge because it will mean competition to their existing privately owned bridge. The Matty Maroun family and its entities have launched a multi-million dollar TV ad campaign that insists it will cost Michigan taxpayers.
We asked Dan Crane, a Professor of Law at the University of Michigan to look over the contract and answer whether Michgian taxpayers could be on the hook for any of the cost.
“The contract is quite explicit and clear that the State of Michigan incurs no obligation, no legal obligation, to pay for the construction of the maintenance of the crossing.”
Professor Crane says there are a lot of details in the agreement and some of them indicate the people of Michigan will end up paying for some of the cost in other ways.
- “For one, the contract specifically contemplates that to cross into Canada there will be a toll.”
So, we’ll have to pay tolls if we cross the bridge. Got it.
- "Secondly, the contract contemplates seeking outside sources of funding. There’s a clause that defines revenue as not only the tolls collected, not only the direct funding from the government of Canada, but also seeking outside sources of funding. So, if that ends up coming out of federal, the only point is that it’s federal dollars we’re going to spend on this and not something else.”
So, if federal dollars are one of those outside sources, U.S. taxpayers could end up throwing in some more money, but that’s not definite. Okay. Got that.
- "And, finally, even though the contract does not require Michigan or the State of Michigan’s legislature to pay any of the costs of building or maintaining the bridge it doesn’t disallow that either. And one could imagine that at a future date if there are large cost overruns or delays in the completion of the bridge, that someone might say the Michigan legislature should kick in money to get the job done.”
So, if there are cost overruns or the bridge doesn’t bring in enough money, Michigan taxpers could be asked to throw some money, although that’s not specifically in the agreement. Okay. Got that too.
Governor Rick Snyder has repeatedly said Michigan taxpayers are not on the hook and Canada is putting up the money.
“So, they are advancing the expenses on the Michigan side that will be repaid from tolls. So, there’s no Michigan taxpayer dollars being used for this project which is great,” Governor Snyder said in a video.
And Law Professor Crane says that is what’s in the agreement.
“ The statement is valid insofar as they are not on the hook for the bridge as Michigan taxpayers, as people who pay taxes to the state of Michigan.”
But the Ambassador Bridge company commercials insist Michigan taxpayers will pay. Mickey Blashfield is a spokesman for the company.
“You know, we’ve documented that the figure is at least a hundred million dollars a year of cost to the Michigan taxpayer that would not be underwritten by any of the subsidy that Canada would give in building this bridge.”
Professor Crane says that’s true only if by “Michigan taxpayers” you mean "U.S. taxpayers."
“Just to say it doesn’t come out of the State of Michigan as an appropriation is a different question from saying that Americans don’t pay for or that State of Michigan taxpayers in some sense don’t pay for it. Again, nothing that we do to create a major infrastructure development will come free to us," Crane explained.
The $100 million mention by Blashfield is the money it would cost to operate a new Customs plaza, something we have at every border crossing in the country, including at the privately owned Ambassador bridge. U.S. taxpayers pay for border guards and Customs inspectors and, of course, Michigan residents pay U.S. taxes, but Michigan taxpayers would not pay the entire amount.
So, everything in the agreement indicates in a strict sense Governor Snyder is correct: there are no Michigan tax dollars going into the project and Canada is fronting the money for building the bridge. That includes the cost Michigan would normally bear, building the ramps to and from the bridge on the Michigan side.