May 20, 2014 at 1:00 am

House, Senate leaders move to boost state road repair funding to $1.2B a year

The aging infrastructure shows signs of weakness, as Interstate 75's ramp to the Lodge Freeway is closed for repairs that could take a week. (Daniel Mears / The Detroit News)

Lansing — Legislative leaders are expected to announce today a new plan to boost fuel taxes as the main way to increase state road repair funding by at least the $1.2 billion a year sought by Gov. Rick Snyder.

Senate Majority Leader Randy Richardville was huddling Tuesday with Snyder and House Speaker Jase Bolger, R-Marshall, after telling members of the media he wants as much as an annual $1.5 billion increase in road funding.

Evening meetings also were planned with Democratic leaders, whose members’ votes will be needed to pass such a dramatic increase, said Senate Appropriations Committee Chairman Roger Kahn.

“The major changes that are being discussed for unveiling” today are in House-passed legislation that will set the wholesale tax,” said Kahn, R-Saginaw.

Kahn held an afternoon-long hearing on four bills in a House-passed package designed to raise road revenue by an additional $450 million annually. Richardville, R-Monroe, wants to triple that amount.

The main mechanism in the new plan would be the switch to a percentage tax that would replace Michigan’s flat fuel taxes of 19 cents a gallon on gasoline and 15 cents a gallon on diesel, Kahn said.

The House-passed legislation moves to a 6 percent tax on gasoline and diesel, which would boost revenues a modest amount initially but rely on pump price increases to ramp up revenues later.

Richardville told reporters Tuesday morning he wants to raise $1.3 billion to $1.5 billion a year more for roads, but wouldn’t say how he planned to accomplish the goal.

A rate that effectively doubled the 19-cents-a-gallon flat rate to 38 cents a gallon would create about $1 billion in added revenue, according to fiscal analysts.

The House plan and the idea of boosting road revenue by at least $1.2 billion were widely supported by those testifying at Tuesday’s afternoon’s hearing of the Senate Infrastructure Modernization Committee, also headed by Kahn.

Strongest opposition came from Michigan’s petroleum industry and fuel wholesalers, who argued lawmakers instead should boost the state’s 6 percent general sales tax. Such a hike would require a constitutional amendment approved by voters.

Rate increases of the magnitude under consideration would give Michigan the highest fuel taxes in the country, when the state’s 6 percent sales tax on fuel also is considered, said Mark Griffin, president of the Michigan Petroleum Association.

The sales tax revenue from fuel goes mostly to schools and revenue sharing for local governments, not roads.

Griffin said state and federal taxes on fuel give Michigan an effective tax rate of about 60 cents a gallon now, compared with 48 cents a gallon in Ohio. The rates under discussion, he said, would make the state’s fuel taxes about 80 cents per gallon.

“Pass it along to us, and we’ll be forced to pass it along to our customers,” Griffin warned.
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