May 21, 2014 at 7:47 pm

New state Senate proposal doubles fuel taxes, boosts road funding $1.4B a year

Lansing— Senate Majority Leader Randy Richardville laid out a plan Wednesday to boost Michigan road repair funding $1.4 billion to $1.5 billion a year through moves that include at least a doubling of fuel tax rates.

Under the proposal he has discussed with Gov. Rick Snyder and legislative leaders, Michigan’s flat taxes on gasoline and diesel fuel would be replaced by a percentage levy that would rise from 6 percent to 15.5 percent by 2018 in four steps.

“This is another answer to some of the people who say you ought to do conservative things but do them in a bipartisan way,” said Richardville, R-Monroe, predicting bipartisan approval of the sweeping road bill package early next week.

“I think if we don’t do something about the roads this year, we’re shirking our responsibility,” he added. “I think that we’re ready, and people are going to step up to the plate.”

His plan, if approved, would give the state $600 million to $700 million more to spend on roads the first year it takes effect, he said.

Lawmakers for years have resisted another boost in the fuel tax, last raised by 4 cents a gallon on gasoline in 1997. But their resistance has weakened after a harsh snowplowing tab from last winter, the worst spring pothole season in memory and a consensus Michigan’s roads are among the nation’s worst.

Snyder has sought $1.2 billion more per year for roads. Local officials say the real need is more than $2 billion a year in added funding when their broken roads also are considered.

While the full Senate didn’t vote on Richardville’s proposals Wednesday, Republican Sen. Patrick Colbeck of Canton criticized it as another example of “adding the price of government to the pocketbooks of our citizens.”

Colbeck argued the state could find more money for roads by eliminating some other types of spending, such as $25 million to $50 million a year in tax breaks given filmmakers as an incentive to shoot movies in Michigan.

Richardville’s plan would start with conversions of the 19-cent-per-gallon gas tax and 15-cent-per-gallon diesel fuel tax to a 6 percent fuel tax on both.

Essentially revenue-neutral, that rate would take effect in October, but rise Jan. 1 to 9.5 percent, 11.5 percent in 2016, 13.5 percent in 2016 and 15.5 percent in 2018, according to Richardville.

The proposal also would dedicate $130 million to $140 million in revenue from the 6 percent sales tax on fuel to roads. The sales tax on fuel now goes to schools, local government revenue sharing and the General Fund — the state’s main checkbook.

Richardville also said part of the increase in road funding would come from elimination of the 10 percent reduction in registration fees that new-car buyers get the second year they own their vehicles.

“We’re not increasing anybody’s registration fee, but we’re going to stop giving a rebate to them,” Richardville said.

Movement toward ramped-up road repair spending in Michigan began as a Senate committee Wednesday morning approved about $400 million in added revenue through revised or substituted versions of House-passed bills.

The Infrastructure Modernization Committee sent the full Senate legislation containing the proposed changes in registration fees, converting the flat tax to a percentage rate and earmarking a portion of the sales tax on fuel for road repairs.

Those provisions were included in a plan from House Speaker Jase Bolger to raise $450 million a year in added road funding. The Bolger legislative initiative passed the House earlier this month.

The Senate committee is dealing with the package from Bolger, R-Marshall, while also preparing to examine Richardville’s proposals for tripling the amount raised by Bolger’s plan.

Committee members Rebekah Warren of Ann Arbor and Morris Hood of Detroit, both Democrats, voted against the legislation saying a dramatic fuel tax hike would hit those least able to pay the hardest.

They sought unsuccessfully to offset the impact by trying to tie the road funding package to Democratic bills boosting the minimum wage, extending state jobless benefits and increasing the earned income tax credit for low-income Michiganians.

Hood and Warren also sought through amendments to repeal Michigan’s income tax on pensions and provide an income tax credit for fuel taxes paid by people in lower-income categories.

“We would love to help you come up with a plan that we could support,” Warren said.

Hood told of a neighbor who can’t afford repairs to get his car running again, let alone pay a higher pump price for gasoline.

Sen. Jack Brandenburg, R-Harrison Township, also voted against some of the bills in the House-approved package, arguing that an increase in the sales tax would be a fairer way to fund added road repairs. A sales tax hike would require a constitutional amendment and a statewide vote.

Sen. John Pappageorge, R-Troy, didn’t necessarily disagree with Brandenburg, but said lawmakers have to act on the compromise before them.

“What’s before us is something that will slow the rate of (road) deterioration,” Pappageorge said, adding lawmakers should act on this plan and not continue discussions about other ideas in what has become a pattern of “decision avoidance.”
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