Michigan road money talks remain stalled

Gary Heinlein
Detroit News Lansing Bureau
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Lansing — Legislative leaders and the governor’s office reported no compromise was reached Monday on competing plans for the additional $1.2 billion a year needed to fix Michigan’s crumbling roads and the process appeared to be going slowly.

“It’s not complete yet, but I think it’s being paved,” Senate Majority Leader Randy Richardville said Monday as differing characterizations of the talks emerged from an initial series of meetings.

“At every meeting, I think we’ve had a progression of ideas,” added Richardville, R-Monroe. “I’m sworn to secrecy so ... can’t give you any details, but I’m still positive. I really believe that if we don’t do anything else, this is the one thing that should get done.”

House Speaker Jase Bolger, R-Marshall, evidently had an alternative impression of the discussions.

“At this point, it sounds like the speaker is the only one willing to compromise and move off of his position a little to help reach a deal,” said Bolger spokesman Ari Adler, adding that it appears the process “is in a holding pattern.”

Others privy to the talks said Bolger appears open to alterations in his House-approved proposal for use of the existing sales tax on fuel to create a dedicated road-funding revenue stream, but not to the Senate-passed plan that calls for an increase in fuel taxes.

Revenue collected from the 6-percent Michigan sales tax on fuels currently goes mostly to education and local governments. Bolger’s plan would rely on overall sales tax revenue growth from an improving economy or state budget adjustments by lawmakers to ensure schools and municipalities wouldn’t lose money as the sales tax on fuel gradually was shifted to cover road and bridge repairs.

Republican Gov. Rick Snyder and legislative Democrats have qualms about the Bolger plan.

“We believe we’ve got to protect school funding and (funding for) local communities,” said House Democratic Leader Tim Greimel of Auburn Hills, who is participating in the negotiations. He said he’s concerned the plan contains too much uncertainty that schools and local governments would be protected from revenue losses projected by fiscal analysts.

Snyder has said he has “serious reservations” with the House-approved plan that would be phased in over six years while the sales tax is phased out.

By contrast, the Senate-approved plan would create the $1 billion-plus annual funding bump by Jan. 1, 2018, by eliminating the 19-cents-gallon gas tax and replacing it with a wholesale gas tax that would start at 9.5 percent and gradually increase to 15.5 percent. It would effectively double the tax at the pump, according to a Senate Fiscal Agency analysis.

Richardville added that he’s not interested in extending the legislative session beyond Thursday so it’s crucial to have a compromise proposal ready no later than Wednesday for a vote by a six-member House-Senate conference committee. It would give the full House and Senate time to pass the plan after the conference committee approved it.

The continued road funding obstacles came as two research groups gave contrasting interpretations of what the House bill would do.

The state School Aid Fund would lose $661 million by 2020 and $889 million in revenue from the sales tax on fuel by 2023 under the Bolger plan, according to an analysis by the nonpartisan Citizens Research Council of Michigan based on House Fiscal Agency projections.

State revenues available for sharing with cities, villages and townships would drop $88 million by 2020 and $121 million by 2023 under the Bolger plan, according to the same analysis.

But the free-market Mackinac Center for Public Policy in Midland says Michigan’s economy is entering its fifth year of recovery and state tax revenues reflect that.

“Rep. Bolger’s plan devotes more of the state’s resources to the roads without reaching deeper into taxpayer pockets,” wrote James Hohman, assistant director of fiscal policy at the Mackinac Center in a Dec. 4 blog post.

“Continued growth can ensure that you can have both more funding for schools and more funding for roads without a tax hike,” Hohman added.

Leaders are scheduled to hold another meeting on the road plans Tuesday morning.

There’s a possibility that other ideas, such as raising part of the necessary revenue through an increase in vehicle registration fees, could become part of the final package, Richardville said.

“It wouldn’t be fair to not talk about everything when we said everything was on the table,” he said.


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