Road tax hike plan tests new leaders
Lansing – — Three new legislative leaders are vowing to push for voter approval of a $1.4 billion road repair plan because there's no politically viable alternative.
Senate Majority Leader Arlan Meekhof, R-West Olive, Senate Democratic Leader Jim Ananich of Flint and new House Speaker Kevin Cotter, R-Mount Pleasant, were not the architects of the complex compromise plan.
But they say they're counting on voter approval of a percentage point increase in the 6 percent state sales tax in a May 5 election.
"It's a business decision," said Cotter, a conservative unaccustomed to seeking higher taxes of any kind.
Without a transportation budget big enough to deal with long-foregone repairs, "we're looking at a $1 billion-a-year loss in value" for the state's road system, he said.
"If (fiscal analysts') numbers are correct, further delay is a tax increase."
That's among several challenges facing Ananich, Cotter and Meekhof, who join the returning House Democratic Leader Tim Greimel of Auburn Hills as the top four lawmakers of the 98th Legislature that convenes for the first time Wednesday.
They will work most closely with Gov. Rick Snyder on issues such as major spending targets in the 2014-15 state budget proposal he'll unveil next month and new energy policies he's expected to preview in his Tuesday State of the State address.
New leaders customarily huddle with their caucus members and draw up priority lists that set the two-year legislative agenda. Cotter expects in the near future to lay out a House GOP plan based on feedback from incumbents and new members.
But selling the complex road funding deal their predecessors forged in an all-night session in December on the final day of the last Legislature will be a crucial opening step for the new leaders.
Without voter approval, the thorny road-funding issue gets dumped back to a new Legislature trending farther to the right.
At least four new tea party members join other conservatives, many of whom may battle to block any alternative to the fragile compromises built into the current plan.
New Rep. Todd Courser, R-Lapeer, has been urging voters in his district to reject raising the sales tax to 7 percent.
A Lansing Democratic consultant forecasts headaches for this batch of leaders as they try to find consensus on tough issues.
"It's being said that if you liked the tea party last session, you'll love it this session," said Vanguard Public Affairs President T.J. Bucholz. "All signs are pointing toward a very contentious 2015 ... considering some of the rhetoric already coming from some new members."
A Truscott-Rossman President and Principal John Truscott, who was press secretary to Republican ex-Gov. John Engler, said ideological rhetoric is different from governing.
"You have to be more pragmatic when you actually have to get things done," said Truscott, a Republican consultant.
"When they get in a committee room, they'll realize there are some pretty nice, smart people with whom they'll be able to work together, even if they have differing ideas."
Bottom line: More money
Ananich, the new Senate Democratic leader, said he wants to dial back the contentiousness that arose during the 2013-14 Legislature. He wants his 11-member caucus to have an impact on legislation even though Republicans have a 27-member majority.
"It's important to get back, as best we can, to starting conversations that aim to get to a 'yes,' rather than starting conversations with a mindset we will say 'no,' " Ananich said.
"I'm not saying we're just going to roll over, but we're not going to say 'no' until we've had a full conversation."
The GOP majority agreed to some Democratic priorities before casting the key votes to pass the roads plan in the Senate — in part because leaders needed a two-thirds majority vote to put the sales tax hike on the ballot.
As a result, the plan would raise the state's earned income tax credit for low-income residents to 20 percent of the federal rate, up from 6 percent now.
It also would add $300 million to the annual school aid budget and pump $70 million a year more to local governments.
Should the roads plan flop with voters, Truscott's optimistic expectations will be tested.
Cotter said he'd want to return to last year's initial House GOP proposal that would have merged the state's 6 percent sales tax on fuel into a new proportional — and higher — fuel tax dedicated to road repairs. That plan would have prevented losses for current recipients of fuel-related sales tax revenue — schools and local governments — by earmarking economic recovery-sparked state revenue increases for them.
But Meekhof said he has little interest in that proposal. The Senate's initial plan called for a more than doubling of fuel taxes through a proportional levy over four years.
"Going back to (the House) plan would be a disappointment because it wouldn't fix the problem," Meekhof said. At today's less than $2-a-gallon pump prices, it would come up more than a half-billion dollars short of what's needed, he added.
"We should not fool ourselves into thinking we can solve the problem without spending more money," Meekhof said. "I'm going to work very hard to make that (voter approval) happen."
The future is uncertain for other carry-over issues from the last session.
Meekhof wants to revise and update the certificate of need law that requires state approval for construction of new medical facilities.
Lawmakers took no action last session on a proposed carve-out from the law to permit a new McLaren hospital in Clarkston.
Lawmakers and their new leaders also face a projected 172.7 million general fund shortfall in the current-year budget — due mostly to tax credits businesses are cashing in as they expand and the economy grows.
Cotter said this shows the projection is not a direct indication that Michigan's economy is stalling.
"We'll be able to work with that," he said.
But the projection could challenge the desires of legislators like Sen. Jack Brandenburg, R-Harrison Township, who want to drop the state income tax rate to 3.9 percent — where it was before lawmakers boosted it to fix a nearly $2 billion 2007 budget deficit.
Brandenburg argues middle-class Michiganians deserve the tax relief. Snyder objects because the tax cut could blow a hole in the state budget, and the new leaders aren't embracing the proposed cut now.
While Cotter likes the idea on principle, he hedged on whether he'll embrace it this year.
"It's too early to say, but I would be interested in that if it's possible," he said.
House Democrats, even with a smaller caucus, remain fixed this year on getting the GOP majority to restore the homestead property tax credit for seniors that Snyder and fellow Republicans reduced in 2011, said Greimel, the returning minority leader.
"We're going to continue to push for more tax fairness in the state tax code," Greimel said.
Detroit News Staff Writer Chad Livengood contributed.