Tax hike would trigger spending other than for roads

Chad Livengood and Gary Heinlein
Detroit News Lansing Bureau

Lansing — The centerpiece of the Legislature's effort to raise $1.2 billion in new funds for roads is a 1 percentage point increase in the 6 percent sales tax.

If voters OK raising the sales tax to 7 percent on the May 5 ballot, it will trigger other spending and policy initiatives. Many were stipulations by Democrats in exchange for voting to put the sales tax measure on the ballot:

■Hundreds of millions in more money for the School Aid Fund. Public schools could see as much as $200 more per student if the sales tax is approved.

That's because the constitutional amendment would create an earmark of those funds for the School Aid Fund.

In addition, the road funding deal clarifies that School Aid Fund monies cannot be used to subsidize the operations of the state's 15 public universities. It would free up about $200 million in school aid that Gov. Rick Snyder has tapped during the past four years for the state's higher education funding, which traditionally has been paid out of the state's general fund.

■Surcharge on hybrid and full electric vehicles. A group of Republican lawmakers has been seeking a special tax on hybrid or electric vehicles because they don't consume as much, or any, gasoline, while weighing as much as conventional cars and contributing to highway wear and tear.

They added a new $75 annual vehicle registration fee for vehicles that are "powered solely or predominately by electricity" and a $25 annual fee for hybrids that use a combination of gasoline and electricity.

Those lawmakers also got some satisfaction in a bill imposing new fees on heavy commercial trucks and eliminating discounts on vehicle registration fees for newer cars.

■Education study: This could be called the revenge of Mark Schauer, the Democratic gubernatorial candidate who failed to defeat Snyder despite arguing the governor had cut state funding in the classroom. His campaign solution was to create a task force to study Michigan's K-12 school funding system.

"Once a thorough study of the costs of educating a child is conducted, the per pupil funding formula should be changed to reflect the higher costs of special education, high school, older students and at-risk children," the Schauer plan said.

Legislative Democrats pursued education adequacy funding for two years — to no avail — until the road funding stalemate arose. "I think it's going to make the debate around education funding much more complete," said Rep. Brandon Dillon, D-Grand Rapids.

But the idea raised hackles early Friday morning in the Republican-led Senate, where the school funding study substitute replaced the original bill that encouraged school districts and charter schools "to provide instruction that focuses on the core principles of the Declaration of Independence, the United States Constitution and the State of Michigan Constitution."

Sen. Patrick Colbeck, R-Canton Township, withdrew his sponsorship. He complained from the floor that the amended bill was at odds with the original intention of promoting limited government, but he was cut off by the presiding officer. A parade of Republican co-sponsors also withdrew their names, and the bill narrowly passed, 20-18.

■At-risk education funding: The Legislature threw in $40 million for at-risk student education and services in this school year into a bill requiring school districts and charter schools to disclose more information on salaries, benefits, spending and contract policies on their websites.

Of the $40 million, about $3.56 million is targeted at child and adolescent health centers. Republicans who voted against the package of bills complained about this add-on and others.

"There's a lot of extra spending to get votes," said Rep. Jon Bumstead, R-Newaygo. "(Education funding) has nothing to do with roads."

■Internet sales: Legislation strengthening enforcement of sales tax collection by Internet retailers was linked to the deal.

Forcing retailers such as that have a physical presence in Michigan to collect the 6 percent sales tax is expected to boost revenue by $60 million. That figure could grow if voters approve a 1 percentage point increase in the sales tax.

"I think it's part of the equation, too, because that's money that should be going into the (state's) coffers," said Sen. Mike Kowall, R-White Lake Township. "It's tax evasion, no matter how you look at it."