Michigan Senate OKs Roads Plan with Gas, Vehicle Fee Hikes
The Michigan Senate approved a new plan to boost road spending with a 20 percent hike in vehicle registration fees and a 7.3-cent gasoline tax increase
LANSING, Mich. (AP) - The Michigan Senate narrowly approved a plan to boost road spending on Tuesday, which includes a 20 percent hike in vehicle registration fees and a 7.3-cent gasoline tax increase, as lawmakers took a major step toward resolution after months of contentious wrangling.
The proposal, which drew nearly all its support from Republicans, was sent to the House, which could vote later Tuesday. It would generate $600 million a year for deteriorating roads and bridges in 2017 and more in future years until topping $1.2 billion in 2021 and beyond.
The main components include:
- a 7.3-cent increase in the 19-cents-a-gallon gas tax and an 11.3-cent hike in the 15-cent diesel tax in 2017 - raising $400 million - with automatic yearly inflationary increases to both taxes in 2022 and beyond;
- a 20 percent rise in license plate fees in 2017 - bringing in $200 million - averaging $20 more per passenger vehicle, along with special additional fees for hybrid and electric vehicles;
- a dedicated annual shift to roads from the $9.9 billion general fund - Michigan's second-largest account behind education - starting at $150 million in the 2018-19 fiscal year, $325 million in 2019-20 and $600 million in 2020-21 and after;
- a yearly reduction in the 4.25 percent personal income tax, starting in 2023, if general fund revenue growth outpaces the rate of inflation times 1.425 (if the inflation rate were 2 percent, for example, the tax cut would only take effect if revenues grow by more than 2.85 percent);
- an expanded income tax credit for homeowners and renters, so those earning up to $60,000 are eligible - above the current $50,000 limit -the maximum credit rises from $1,200 to $1,500 and an income multiplier is higher.
"Fixing Michigan's roads has been a priority for years, and today we are acting to make sure Michiganders will be able to drive on good, safe roads and bridges," said Sen. Wayne Schmidt of Traverse City, who was among 19 Republicans to vote for the tax and fee increases.
Democratic Sen. Virgil Smith of Detroit also supported the legislation. "It is an embarrassment that the Motor City, the heart and soul of the auto industry that produces the majority of our vehicles, is home to some of the worst roads in the country," he said.
Opponents, which included 10 Democrats and eight Republicans, said the plan would not pump $1.2 billion into the system - the minimum many say is needed to bring roads up to par over 10 years - for five years. Future legislators would have to make unspecified spending cuts to account for diverting general funds, they said, saying the proposal is really a $600 million roads plan, not a $1.2 billion one.
"You are voting to raise taxes to keep the roads exactly as they are - poorly maintained and riddled with potholes," said Sen. Curtis Hertel Jr., an East Lansing Democrat. "By 2021, when this bill is fully implemented, 50 percent of the roads will already be in poor condition."
Sen. Patrick Colbeck, a Canton Township Republican, noted that voters in May resoundingly defeated a proposed 1 percentage point increase in the sales tax to boost spending on roads, education and municipalities.
"In light of all the financial pressures upon our families due to increasing costs in all facets of their lives, don't you think it would be the responsible thing to do to find ways to fix the roads without taking more of their money?" he said.
The governor first called for a comprehensive road-improvement plan four years ago. Lawmakers agreed nearly a year ago to higher fuel and vehicles fees, but those were contingent on voters approving the sales tax increase. The plan the Senate OK'd Tuesday was the fourth passed by either chamber since June.
Snyder called the package "potentially a good balance in terms of doing things for roads and being fiscally responsible. ... Compromise is not a bad word."
The budget that took effect in October includes a record-high $400 million general fund transfer to a $3.9 billion transportation budget hampered by stagnant fuel tax revenue - the fifth straight year such a shift is being done.
The bills would generate at least $50 million a year annually for public transit and let Detroit use up to 20 percent of its transportation funding for transit.
House Fiscal Analysis of Senate-passed roads plan: http://1.usa.gov/1MfIBfK
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Copyright 2015 The Associated Press.