The Michigan League for Public Policy on Tuesday called on the Republican-controlled Senate to increase the Earned Income Tax Credit to offset the hit the working poor would take from a 'regressive' increase in the state's 6 percent sales tax. (Charles V. Tines / The Detroit News)
Lansing— A self-imposed legislative clock is ticking on lawmakers to decide whether to raise taxes this week to fix the state’s crumbling roads as demands for tax relief for the poor pile up.
Senate Majority Leader Randy Richardville, R-Monroe, said Tuesday he’s in talks with legislative leaders to raise the gas tax and eliminate discounts on vehicle registration fees to generate $1.5 billion extra a year to repair bridges and roads.
As an alternative, Richardville said, lawmakers may place a 1 percent or 1.25 cent increase in the 6 cent sales tax on the November ballot and let voters decide which plan becomes law Jan. 1. The sales tax would be dedicated to roads and bridges.
“Those are the options that we’re looking at. And I think it’s going to have to be almost surgically completed for us to do it right,” Richardville told reporters. “We have to make sure the math is right and we don’t shortchange the roads. I mean, if we’re going to do this, let’s do it right.”
Placing a sales tax increase on the November ballot would require a two-thirds vote of both houses of the Legislature, meaning GOP leaders would have to get Democratic votes in the House and the full support of their 26-seat Senate super-majority.
“There is very little appetite in our caucus for increasing the sales tax,” said House Minority Leader Tim Greimel, D-Auburn Hills. “If the Republicans want to impose a massive tax increase on gasoline, low- and middle-income families deserve some tax relief.”
While Michigan tries to find a long-term fix for its roads, Congress is in a stalemate about how to repair the highway trust fund before it is forecast to dry up as soon as August. Michigan has set aside enough money to complete projects for the rest of the season, but any future major work would be shelved unless Congress acts.
In addition, the two-year federal highway authorization legislation will expire at the end of September. For federal money to continue to flow to Michigan’s aging infrastructure, Congress would need to extend the law or authorize a multiyear funding package.
The state relies on about $1 billion a year in road money from the federal government, or about a third of its transportation budget.
Among the ideas Congress is floating to repair the Highway Trust Fund are raising the federal gas tax 15 cents, closing tax loopholes on businesses and the wealthy as well as curbing Saturday mail delivery.
As Richardville worked Tuesday to drum up support for his latest road funding plan, the Michigan League for Public Policy called on lawmakers to increase the Earned Income Tax Credit to offset the hit the working poor would take from a “regressive” increase in the state’s 6 percent sales tax.
“Increasing the Michigan Earned Income Tax Credit would be a perfect vehicle to offset the additional costs on those who can least afford them,” Gilda Jacobs, president and CEO of the Michigan League for Public Policy, said Tuesday in a statement. “This will help workers stay on the job while making sorely needed repairs to the state’s roads.”
Senate Minority Leader Gretchen Whitmer, D-East Lansing, has suggested horse-trading an increase in the EITC — which Republicans slashed in 2011 — for a hike in taxes to fund roads.
Last week, Richardville bristled at Whitmer’s proposal, saying it “muddies” up his efforts to secure Republican votes for a gas tax increase in an election year.
“All of these things are part of the discussion,” he said.
In addition to tax relief, some Democrats have floated a proposed amendment to Michigan’s right-to-work law that would require workers who opt out of labor unions to pay unions a so-called “fair share” fee to maintain a collective bargaining agreement with their employer.
“There’s been some discussion about it, but it’s not the sole or even primary topic of conversation,” Greimel told The Detroit News.
Richardville said linking a change to right-to-work with a tax hike to fix roads is an idea “far out in left field” that he won’t entertain.
Negotiations over road funding are in a critical stage this week as the GOP-controlled Senate intends to adjourn Thursday for a 12-week summer recess. The Senate has scheduled just two working days in Lansing — July 16 and Aug. 13 — between now and the second week in September.
Richardville said motorists “are crying for us to do something” about the state’s pothole-ridden roadways.
“I think it’d be a shame if we went home and didn’t do something,” he said.
Gov. Rick Snyder, who has been pushing lawmakers to raise at least $1.2 billion more annually for roads, is in New York City Wednesday visiting credit-rating agencies and attending a corporate site selectors event, spokeswoman Sara Wurfel said.
The governor and his staff remain “very much involved in the legislative process and road funding discussions underway,” Wurfel said.
Snyder was holding a mid-day conference call with legislative leaders, Richardville said.
But Whitmer noted Snyder also has been absent in the past as lawmakers wrestled with tough issues and criticized the untimeliness of his New York trip. Last June, Snyder had to fly back early from a trade mission in Israel in a failed effort to drum up votes in the Senate for his legislative effort to expand the Medicaid health care program for the poor.
When the governor’s high-priority legislation is up for a vote, Whitmer said he should be in town to engage lawmakers and help work out compromises to pass it.
She also argued that lawmakers shouldn’t have to hurry a roads bill to meet the Thursday adjournment deadline set by Richardville. She said everyone should be willing to work further into the summer to come up with good legislation.
Several lawmakers also want to remove the sales tax on gasoline — which is dedicated almost entirely to schools and municipalities, not roads. But that plan would require replacing the nearly $1 billion in revenue for schools and cities.
Richardville said it’s unlikely sales taxes would be removed from gasoline in the near future.