Prop 1 defeat sparks fight on alternative plans

Chad Livengood
Detroit News Lansing Bureau

Voter rejection of the Proposal 1 sales tax increase is likely to renew lawmaker attempts to extract cuts elsewhere in the state budget to raise the $1.3 billion more needed annually for repairing Michigan's deteriorating roads and bridges.

"The taxpayers sent a very clear message today with their rejection of Proposal 1 — no new taxes," said state Sen. Jack Brandenburg, R-Harrison Township. "We in the state Legislature now need to move in the most aggressive fashion to free up funds badly needed for road repair."

Voters soundly rejected Proposal 1 by a four-to-one margin, with 80 percent no, according to unofficial results.

In the days leading up to Tuesday's election, Gov. Rick Snyder repeatedly expressed concern that his fellow Republicans who dominate the Legislature would read rejection of Proposal 1 as a voter revolt against any tax increases when they go back to the drawing board.

"It's not a pretty drawing board," Snyder said in an interview before the election. "The challenge is, the voters just voted down a tax increase. You're going to find a number of legislators finding it even more challenging to vote for an increase. And then how many plans did we look at before?"

The Legislature slapped together Proposal 1 a week before Christmas after two years of talks failed to generate a consensus between the House and Senate over how to raise the additional taxes. Lawmakers looked at everything from raising gas taxes to massive hikes in vehicle registration fees and small-dollar revenue generators, such as slapping truckers and electric vehicle owners with additional taxes.

"There is no Plan B that people are behind," House Speaker Kevin Cotter, R-Mount Pleasant, said recently. "We're going to have to start making a Plan B. I know there are probably 63 Plan Bs in my caucus alone."

Anticipating Proposal 1's defeat, state Sen. Patrick Colbeck has been drafting a plan to slash spending that could result in the introduction of as many as 83 different bills.

Colbeck, who voted against putting Proposal 1 on the ballot, said his colleagues were too focused on raising new revenues instead of prioritizing spending in favor of roads.

"They were kowtowing to the false narrative that the only way to fix our roads is to increase taxes," said Colbeck, R-Canton. "It was a philosophical flaw from the beginning. You have to have a conversation about the expense side of the equation before you start digging into their wallets."

Senate Majority Leader Arlan Meekhof, R-West Olive, said the voters "have clearly spoken" that they want a legislative solution, but he doubts there's the minimum 56 House votes, 20 Senate votes and Snyder's signature to sacrifice other programs for road funding.

"I don't know if you're going to get 56, 20 and one to cut a billion dollars out of it," Meekhof told The Detroit News late Tuesday. "You might be able to do that once, but after that you'd be a pretty sad state."

Democrats, who stood to make major political gains from the passage of Proposal 1, renewed their call for corporations to bear the brunt of any legislative tax hike.

"Raising taxes on working families while corporations see their taxes cut is no way to build a Michigan where we can stay and succeed," Lon Johnson, chairman of the Michigan Democratic Party, said in a statement. "It's time for corporations to pay their fair share."

Voter exasperation

Louis Samuel, 64, of Farmington Hills, was a solid no vote on Tuesday. But he'd like to see the roads fixed because they are in sorry shape.

"I think they (legislators and the governor) need to go back and work on this and see what other things can be done," Samuel said. "Because I think taxing a person for something that really we should already have is kind of extreme."

Special interest groups in Lansing with a stake in the state budget are warning lawmakers they shouldn't read the results to say voters totally oppose new taxes and favor spending reductions in other areas of state government to fill potholes and replace aging bridges.

A statewide poll of likely voters conducted last week found divisions among the electorate about what lawmakers should do next.

About 37 percent polled said lawmakers and Snyder should cut existing programs, while 35 percent said they should raise taxes and fees to generate more money for roads. Another 10 percent said they favor a combination of new taxes or fees and budget cuts.

The poll was paid for by Michigan Municipal League, the Michigan Health & Hospital Association and the Michigan Association of Health Plans — three groups with a stake in the state's $9 billion general fund and who backed Proposal 1.

Pollsters at EPIC-MRA in Lansing found widespread voter opposition to "deep cuts" to K-12 education, community colleges and public universities, health care programs for low-income women and children, and local government aid.

Will voters accept cuts?

"What we found in this poll is when people are faced with cuts to essential services, they agree Michigan can't cut its way to better roads," said Laura Wotruba, director of public affairs at the Michigan Health & Hospital Association. "Clearly voters want the Legislature to find new revenues to fix the roads."

The poll, conducted April 25-28, found 64 percent of voters would support increasing the sales tax from 6 percent to 7 percent if it were solely dedicated to roads.

Proposal 1 contained multiple triggers to increase the sales tax, fuel taxes and registration fees to boost revenue for road repairs, education, municipalities and provide a tax credit for low-income families.

Ron Baumanis, 55, of Ann Arbor said he couldn't separate roads from the other spending and voted no.

"It's got too many other things mixed into it," Baumanis said. "If it was purely a road thing, I might have voted for it."

Carolyn Pohlman also voted no and took particular issue with state officials complicating what should have been a simple issue in her mind.

"I have to say I was not real pleased with what we were offered," said Pohlman, 85, describing the complex nature of Proposal 1. "They've been doing that kind of thing in Washington for years, so I guess we're used to it."

Roger Martin, a Lansing communications consultant for the three groups that paid for the poll, worked on the Safe Roads Yes campaign for Proposal 1 and said voter confusion was difficult to overcome.

"What this poll tells me is voters now know what they don't want the solution to be," Martin said. "They just want to know what the heck they're voting on."

Perseverance may prevail

Martin said it could take more than one attempt at the ballot box to get a road funding solution voters can accept, as was the case with property tax reform in the 1970s, '80s and finally passing in 1994 with Proposal A.

"It's been 18 years, nine Legislatures and three governors to get this proposal on the ballot," Martin said Tuesday night. "This has never been easy, and it's not going to be easy going forward here, but what hasn't changed is the condition of our roads. They are dangerous, and voters want them fixed so now it goes back to the Legislature."

Paul Mitchell, the Saginaw-area businessman who spent his own money to help defeat Proposal 1, said he doesn't think there need to be draconian cuts to programs.

"What the voters are expecting is that (legislators) are respecting the taxpayer money we are sending them, that they'll spend it efficiently and effectively, that they'll prioritize their spending based on what the voters want," Mitchell said.

Capitol observers say voter rejection of the road funding plan could spark new battles over generating revenue for other programs to free up money for roads, such as hiking liquor license fees.

"You're going to have those two factions head-butting because you'll have the group that says 'they turned it down so they don't want anything increased' versus the people saying 'we have go to find revenue somewhere and these fees are how we'll do it,' " said Jennifer Smith, government relations director for the Michigan Association of School Boards.

Groups representing K-12 public schools fear lawmakers may try to shift more spending on community colleges and universities to the $14 billion School Aid Fund in order to free up money for roads in the $9 billion general fund.

Lawmakers did as much earlier this year when they tapped the School Aid Fund for $325 million to plug a deficit in the general fund caused by ballooning business tax credits. About $573 million of the $1.94 billion spent on community colleges and universities comes from the School Aid fund.

Proposal 1 would have added a constitutional prohibition against using School Aid funds for the state's public universities.

"If it's an open door that they can continue to shift funds from the general fund to School Aid to pay for higher ed, that's an awfully big budget for them to be able to continue filling with School Aid dollars," Smith said.

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Staff Writers Leonard N. Fleming, Jim Lynch and Gary Heinlein contributed.