Legislative leaders seek a road deal
Lansing — Legislative leaders will attempt to hash out a deal to generate $1.2 billion in additional money for road repairs in a conference committee — and extending the sales tax to some services is a possible option.
Senate Majority Leader Randy Richardville said Tuesday that adding the 6 percent sales tax to certain services has not been ruled out.
“You can’t say no unless you consider everything,” said Richardville, R-Monroe. “... I’m really committed to trying to get something done.”
Gov. Rick Snyder and Republican and Democratic leaders emerged from a closed-door meeting Tuesday evening after deciding to send several competing proposals to a six-person committee in an attempt to forge a road funding agreement before the session is scheduled to end Dec. 18.
“We’ll have people from both chambers working on what’s hopefully a solution on transportation,” Snyder told The Detroit News as he exited his Capitol office.
The conference committee will be composed of three senators and three representatives, with majority Republicans controlling four of the seats. If the panel can get two votes from members of the Senate and House, their reported legislation would be advanced to the floors of both chambers for a vote, potentially next week during the final three days of the lame-duck session.
A conference committee recommendation cannot be amended.
The road funding choices include raising the existing gas tax, hiking fees on truckers, lowering truck weights, imposing new warranty requirements on road builders and asking voters to approve a sales tax increase dedicated to roads.
After the House passed a bill last week ending the sales tax on gasoline and diverting the revenue to road repairs, some lawmakers have been seeking new ways to boost sales tax revenue that mostly goes to schools and, to a lesser extent, municipalities.
Rep. Jeff Farrington, R-Utica, quietly introduced a bill last week that would slap the 6 percent sales tax on limousines, sports team tickets and courier services such as FedEx shipments. Farrington acknowledged the bill could be amended to add other services.
House Bill 6082 calls for the additional sales tax revenue to be split three ways for road repairs: 39 percent to the Michigan Department of Transportation, 39 percent to county road commissions and 22 percent to cities and villages.
“It might be ignored or it might drive a little revenue,” Farrington told The News. “This bill is just another way to give them some ammunition.”
In 2007, the Legislature passed a short-lived bill extending the sales tax to an array of obscure services, including baby shoe bronzing and tarot card reading, in an effort to balance the state budget. After public outcry, the sales tax on services was repealed before the levy could ever be tacked on.
Senate Minority Leader Gretchen Whitmer was skeptical lawmakers would wade back into the controversial tax.
“I don’t know, I’ve been down that road,” Whitmer told reporters.
Opposition to House plan
Last week, the House narrowly approved Speaker Jase Bolger’s plan to repeal the sales tax on gasoline — most of which goes into the state School Aid Fund — with a replacement tax dedicated to roads. The sales tax on gasoline would be gradually phased out as the replacement tax is phased in.
Bolger, R-Marshall, has argued that projected growth in sales tax revenue would be enough in future years to replace revenue public schools and cities would lose through the move.
But officials from the statewide groups for school administrators and school boards said Tuesday the House plan would erode hundreds of millions schools now receive from the School Aid Fund, resulting in a “major catastrophic danger” for Michigan schools.
If Bolger’s plan had been in full effect in 2013, it would have removed $623 million from the School Aid Fund, equating to about $415 per pupil, said Mitch Bean, a former director of the non-partisan House Fiscal Agency who is now with Great Lake Economic Consulting.
“We can have crumbling roads, but if we don’t have a strong education base to support the children of Michigan our future will be dim,” said William H. Mayes, executive director of the Michigan Association of School Administrators.
The Michigan Municipal League also opposes the House plan.
Snyder said Friday he has “serious reservations” about the funding scheme. The governor prefers the plan passed by the Senate last month that would raise $1.2 billion by raising the gas tax at the wholesale level.
Internet sales tax
On Wednesday, the House plans to vote on a long-stalled bill that would require some Internet retailers to collect the state’s 6 percent sales tax. It could generate an estimated $58 million by forcing retailers like Amazon.com to collect sales tax if they have a physical presence in Michigan.
The timing of the Internet sales tax vote at a time when the sales tax has come into play in road funding negotiations was not lost on House Minority Leader Tim Greimel, D-Auburn Hills.
“We’re concerned that it’s an attempt to back fill the loss in school funding that would result from the House Republicans’ road bill,” Greimel said.
Rep. Eileen Kowall, R-White Lake Township, said the new revenue from collecting Internet sales taxes could be “part of a more comprehensive package” in the road funding talks with the Senate.
“Anything that contributes to the sales tax pot is going to be appealing to them,” said Rep. Rob VerHeulen, R-Walker.