Road map after Prop 1's failure is full of holes

Chad Livengood and Gary Heinlein
Detroit News Lansing Bureau

Lansing — Reeling from a historic voter defeat of a proposed sales tax increase, Gov. Rick Snyder and legislative leaders disagreed Wednesday over whether they can squeeze more than $1.2 billion out of the state budget to fund road repairs without raising taxes.

House Speaker Kevin Cotter of Mount Pleasant said Wednesday he will present fellow Republicans in the coming days with his own Plan B that relies heavily on tapping the state budget's $20 billion in restricted, or dedicated, funds — such as money dedicated to economic development — to raise the needed money.

"The far majority of revenue needs to come from existing revenue," Cotter said. "I would not be interested in a plan that was all new revenue."

But Snyder was more guarded about tapping into dedicated funds, saying it could create harmful "consequences" for the revenue sources on which schools and municipalities rely. The Republican governor said he still favors increasing fuel taxes and vehicle registration fees, making drivers pay more for using the roads they tear up.

"I think that's one of the better solutions that could be a element of an overall solution," Snyder said of a user fee-focused road funding plan.

Senate Majority Leader Arlan Meekhof, R-West Olive, doubts a majority of lawmakers would vote to slash $1.2 billion from existing programs and redirect it to roads.

"You might be able to do that once, but after that, you'd be a pretty sad state," he said.

The emerging divisions over which direction to take next after voters soundly defeated the Proposal 1 sales tax increase by 4-1 also was reflected within the rank-and-file of the GOP majority. It came as Democrats in the minority renewed their call for putting more of the tax burden back on businesses.

"It's long past time that corporations who have benefited from tax cut after tax cut chip in their fair share to repair Michigan's infrastructure," said House Minority Leader Tim Greimel, D-Auburn Hills.

Greimel ripped Republicans who skipped town Wednesday to attend Holland's annual Tulip Time Festival, the day after voters defeated Proposal 1 with a record-setting 80 percent "no" vote. "Republicans have chosen to tiptoe through the tulips instead of getting back to work," he said.

Cotter spokesman Gideon D'Assandro said fewer than six GOP legislators from the 63-member caucus went to Holland for the festival.

But at the direction of GOP leaders, the House did not hold a normal session Wednesday, no attendance was recorded and less than a dozen Republicans were on the floor when Democrats decided to lead the chamber in reciting the Pledge of Allegiance.

Rep. Anthony Forlini, R-Harrison Township, was among the handful of Republican lawmakers in the House.

Add-ons doomed proposal

Forlini voted in December to put Proposal 1 on the ballot, and said the plan went awry when GOP leaders agreed to tack on more money for schools, cities and tax breaks for the working poor to win Democratic votes.

"It's important that under Republican leadership we need to come up with a deal that Republicans can support," Forlini said. "The voters ... don't want to see a Christmas tree."

Snyder signaled he would not accept any short-term solutions, such as tapping the state's $498 million rainy day fund to pay for short-term road repair projects this year.

"There's been a history of the state doing Band-Aids like that in merely glossing over the problem rather than fixing the problem," Snyder said. "Doing one-time or short-term fixes isn't really a great answer unless there's a long-term solution in place."

Randall Thompson, who directed the Coalition Against Higher Taxes and Special Interest Deals' anti-Prop 1 campaign, said he "absolutely" believes lawmakers have the political will to fashion a new plan.

"You have to remember they campaigned on it last fall," Thompson said. "They've got their work cut out for them, and they know they have to do something."

'Give and take' required

Cotter's proposal to "re-prioritize" earmarked funding in budgets for road repairs is the latest plan for shoring up an annual shortfall of at least $1.2 billion for transportation projects. He specifically mentioned $143 million in economic development funds as a source of revenue that could be redistributed to repairing highways and bridges.

"I would say roads are economic development," Cotter said.

Other areas could include $2 billion in restricted funds in the community health budget and billions more within the School Aid Fund, D'Assandro said

Craig Thiel, senior research associate at the nonpartisan Citizens Research Council of Michigan, said voters handed lawmakers a tough assignment.

"The components of a solution are out there," Thiel said. "Unfortunately, it's going to take compromises — give and take."

Thiel said he doubts it's possible to raise the necessary money without higher taxes — "not when it's in the billions of dollars."

While the annual budget exceeds $53 billion, he said, 42 percent is federal funds, 38 percent is restricted money earmarked by law for specific purposes and 19 percent is General Fund money — of which roughly half, or about $4.3 billion, is "truly discretionary" revenue under lawmakers' control without changing laws.

Cotter acknowledged there is no shortage of ideas on how to fund road repairs.

Disabled, advocates rally

Rep. Peter Lucido, R-Shelby Township, used voter defeat of Proposal 1 to propose legislation that would redirect hundreds of millions of dollars in interest earnings from the state's fund for injured drivers toward road repairs.

Lucido contends the $18 billion Michigan Catastrophic Claims Association reaped more than $700 million in interest earnings last year that could be dedicated to roads through an act of the Legislature.

"The Legislature has a right to do what it needs to do to help this state with its catastrophic road disaster," he said.

Cotters said Lucido's plan is a waste of time and effort.

"It's not in any way going to have the level of support needed (to pass)," Cotter said. "It's not something I would be putting my energy into."

The post-Election Day maneuvering occurred as several thousand people with disabilities and their advocates rallied outside the Capitol Wednesday against cuts in services.

"You can't cut the most vulnerable people," said Julian Wendrow of Walled Lake, whose 22-year-old autistic daughter relies on state services for her cognitive disability.

Gilda Jacobs, director of the Michigan League for Public Policy, said anti-tax Republicans need to compromise with Democrats and moderates on a road plan that doesn't gut state community health, education and human services programs.

"We don't want any more budgets balanced on the backs of those who can least afford it," Jacobs said.