Whitmer to GOP: Show me the money on gas tax alternative
Jackson — Democratic Gov. Gretchen Whitmer on Friday challenged legislative Republicans to propose a “real” alternative to fix Michigan’s crumbling roads if they are unwilling to adopt her proposal for a 45-cent-per-gallon gas tax increase.
“I look forward to seeing their plans to raise $2.5 billion to fix infrastructure,” Whitmer told reporters during a stop in Senate Majority Leader Mike Shirkey’s district. “That is the price tag, and that’s why I put this plan on the table.”
Shirkey, R-Clarklake, on Wednesday said he does not think residents can “absorb” the gas tax hike, although Whitmer has also proposed offsetting some costs for low-income workers by doubling the Earned Income Tax Credit.
House Speaker Lee Chatfield, R-Levering, on Thursday called Whitmer’s road funding plan a “non-starter” that has residents “furious” at the prospect of paying the nation’s highest gas taxes. He suggested the House GOP will come up with an alternative plan as part of the budget process and wants to decouple fuel purchases from the state's 6 percent sales tax, which is used to fund schools and local governments but not roads.
Asked about the public outcry over her gas tax proposal, Whitmer said other "leaders haven’t been honest with us, and they haven’t forged real solutions” to fix the roads. Michigan's highways and trunk lines are projected to continue deteriorating despite a $1.2 billion 2015 road funding plan that will be fully phased in by 2021.
“This is not easy, but if it was, someone else would have done it already,” Whitmer said. “I was not elected to tell people what they want to hear. I was elected to solve problems.”
The East Lansing Democrat is touting her $60.2 billion fiscal year 2020 budget proposal as a way to fix a multitude of problems facing the state in a way that would require "one historic vote" by lawmakers. It includes $507 million in new money for K-12 classrooms and $120 million to fight water contamination.
Her plan would also end a “shell game” in state budgets, Whitmer argued during two separate presentations at Northeast Elementary School and Jackson College.
The gas tax proposal would generate $2.5 billion annually in new revenue for the state, but she is also proposing to end a General Fund diversion required by the 2015 road funding law, which would otherwise grow to $600 million by fiscal year 2021. The General Fund is the state's main checking account for discretionary spending, which would total $10.7 billion next fiscal year.
Whitmer's plan would mean $2.1 billion in new money compared with current-year spending and around $1.9 billion over current law in 2021. Freeing up General Fund dollars from the 2015 plan would allow the state to stop using the School Aid Fund to pay for universities, allowing the governor to use that money on new K-12 school spending.
“We’ve been filling potholes by stealing money from the General Fund to pay for it,” Whitmer said. “We’ve been using the School Aid Fund to fill up the General Fund. I say no more shell games. Let’s do it right.”
Shirkey has acknowledged the need for a $2.5 billion annual investment in roads but believes the 2015 road funding dollars should count in that equation. He has suggested a need for roughly $1.5 billion in new spending.
But that's "unfortunately not going to fix the problem,” Whitmer told reporters. Road quality is projected to drop “precipitously,” she said, despite the 2015 law, which raised fuel taxes to 26.3 cents per gallon and increased registration fees.
A commission appointed by then-Gov. Rick Snyder in 2016 recommended the state spend an additional $2.2 billion a year on roads, and officials say the price tag has grown in the past two years. It’s more expensive to replace a failed road than maintain a good one, experts say.
Whitmer also argues that residents could ultimately save money under her gas tax plan if improved roads do less damage to vehicles. Road funding advocates estimate that car repairs cost the average Michigan motorist hundreds of dollars a year.
“I will stake my political career in order to do this right,” Whitmer told business and community leaders during a round table at Jackson College. “You can’t like the education portion of this budget and not support the gas tax” because they are connected.
Rep. Julie Alexander, a Hanover Republican and former teacher, joined Whitmer at the event and praised her for proposing funding to triple the number of state-funded literacy coaches in Michigan schools.
“But what’s important to me is that I’m listening to the people back home and understanding what their priorities are and what they’re willing to do and not do, and I could not be supportive of the 45-cent gas tax,” Alexander told The Detroit News.
Alexander said “there are a lot of conversations going on” in the House Republican caucus about road funding alternatives. She said she is worried that Whitmer’s plan — which would distribute most additional road dollars through a new formula focused on high-traffic roads — could shortchange local roads in her district.
“I understand the frustration of people,” Alexander said. “If the residents I’m talking to knew that the 45 cents was not going to fix the road in front of their home, they would be upset.”
Whitmer’s plan would put $325 million of the new road funding dollars into the traditional Act 51 funding formula, but that’s $275 million less than would happened by 2021 under current law.
Nearly half of the new revenue — $1 billion, once fully implemented — would be spent on interstates and limited access freeways maintained by the state. Thirty percent, or $641 million, would go toward “principal arterials,” the most highly traveled non-freeway routes maintained by the state and local road agencies.
Additional funding would be spent on “minor arterial” roadways primarily maintained by local governments (7 percent), “major collector” local roadways (7 percent), local bridges (4 percent) and “multi-modal innovation projects (3 percent) that could include public transit, rail and mobility services.
Business Leaders for Michigan, a group of corporate executives and higher education leaders, has praised Whitmer for proposing a “bold solution” to fix Michigan roads, and the governor is hoping for broad support in the business community.
Consumers Energy President and CEO Patti Poppe joined Whitmer at the Jackson roundtable and said she supports a “user fee” increase of some kind to generate new revenue for roads but stopped short of endorsing the governor’s 45-cent fuel tax plan.
“It’s early in the negotiation process, and so I think the leaders will do a great job coming together to find the right combination of fixes,” Poppe told The News.
Whitmer has faced criticism from some business leaders over her budget plan to raise taxes on “pass-through” companies to help pay for repeal of the state’s so-called pension tax. A 2011 tax code overhaul approved by Snyder cut business taxes $1.8 billion and paid for it by eliminating exemptions, credits and a planned rate rollback for individuals.
“I’m trying to make sure that we’re able to give pension relief to people that are living on fixed incomes who had the law changed at the last minute on them and have no ability to pay for that new tax,” Whitmer told reporters.
Asked if she would consider negotiating a compromise deal that included a gas tax hike and a potential Republican plan to lower auto insurance rates, Whitmer said she also wants to bring down rates.
“Perhaps there’s a way we can do that at the same time, but the fact of the matter is, we’ve got to get this budget done so we can get moving forward on fixing these problems,” she said.