Lawmakers take look at hiking vehicle registration fees
Lansing — As lawmakers attempt to find a consensus on how to generate $1.2 billion to fix the state’s roads, some House Republicans want to resurrect the idea of raising car and truck registration fees.
In early 2013, Gov. Rick Snyder proposed raising heavy truck and trailer registration taxes by 25 percent and increasing light vehicle registration fees by 60 percent to raise $508 million a year for road repairs.
The Republican governor’s plan would have cost the average driver $120 more a year. The idea was effectively dead on arrival because registration fees are viewed as a “birthday tax” assessed annually when drivers’ plates expire during their month of birth.
But with the Legislature four days away from the end of its lame-duck session, and no agreement on gas taxes in sight, some lawmakers want to re-examine registration fees in a last-ditch effort to address the chronic lack of money for road and bridge repairs.
Rep. Wayne Schmidt, R-Traverse City, said a registration fee increase should be considered because taxpayers who itemize deductions on their federal income taxes can deduct the cost of some of those fees and lower their taxable income.
“That makes them an attractive area,” said Schmidt, who is moving to the Senate next year. “I think it’s a viable area because it gives you an offset (on taxes).”
Fees from vehicle registration, licenses and plates are constitutionally dedicated to the state’s transportation fund and rival revenue generated by per-gallon taxes on gasoline and diesel, which are 19 cents and 15 cents per gallon, respectively.
In fiscal year 2013, vehicle fees generated $942.7 million for road repairs and maintenance, according to the nonpartisan House Fiscal Agency. This fiscal year, fuel taxes are expected to result in $946.5 million — a revenue source that’s declining as more Michiganians drive more fuel-efficient vehicles.
Since Snyder earlier proposed a higher registration fee, “he certainly is open to the possibility,” gubernatorial spokeswoman Sara Wurfel said.
The Legislature’s top two Democratic leaders didn’t embrace the idea Friday when asked about it on a conference call.
House Democratic Leader Tim Greimel of Auburn Hills was reluctant to discuss it hypothetically, but said Democrats want road repair solutions that share the burden and don’t fall most heavily on those least able to pay. He said they also don’t want to divert money from public schools and local communities, which is why they have opposed using sales tax as the chief means.
But Greimel said they remain open to ideas, adding: “Stay tuned.”
Senate Democratic caucus spokeswoman Angela Wittrock said later Friday, “During these type of discussions, all options are put and remain on the table when it comes to finding a comprehensive, fair and sustainable solution for funding Michigan’s roads.”
The joint House-Senate conference committee set to meet this week in an attempt to hash out a road financing compromise has three bills to consider. The first two deal with taxes on gasoline — areas of major disagreement between the House and Senate.
The third bill makes changes to registration fees by eliminating the depreciation schedule for most new vehicles and locking in the tax rate for the life of the vehicle.
The legislation, sponsored by Rep. Mike McCready, also contains some small processing fee increases for Secretary of State services.
McCready, R-Bloomfield Hills, wanted to eliminate special registration fee breaks for trailers, farm trucks and others, but the idea has have met resistance in the Legislature.
McCready said discussions about increasing registration fees have been drowned out by the ongoing debate over gas taxes.
“It seems to be that’s where the big money is,” he said.
But he said registration fees generate hundreds of millions of dollars as well.
“It’s a lot bigger pot than maybe some people realize,” McCready said.
The conference committee should consider a $500 million to $600 million package that contains modest across-the-board increases in vehicle registration fees and the existing gas tax, he said.
“As I’m watching all of these negotiations going on, maybe this is something we need to go back and re-evaluate and consider,” McCready said of vehicle fees.
McCready got a boost Friday from the Michigan Chamber of Commerce. The group backed an increase in vehicle registration fees as part of a way of “making significant contributions to solving the problem,” while opposing the idea of expanding the state’s sales tax to services to help pay for road repairs. But the chamber wants a package that generates at least $1.2 billion more annually for roads.
Some Senate Republicans have preferred a gas tax increase over a vehicle registration fee hike, saying gas taxes hit the pockets harder of people with disposable income who travel more.
“We were concerned about the lower-income people,” said Sen. Mike Kowall, R-White Lake Township. “We’re trying to be sensitive to everyone’s needs.”
Kowall, who will be the Senate’s floor leader next year, is on the six-person conference committee negotiating this week.
Sen. Jack Brandenburg, R-Harrison Township, said he also has no stomach for hiking vehicle registration fees.
“I think it’s a bad idea, I really do,” Brandenburg said. “My main hangup with these fees is that I can remember about 12 years ago when those fees were around $20. Now it is more like $120 or more. It’s too much.”