House approves $1.2B road package that kills tax credit

Chad Livengood
Detroit News Lansing Bureau

Lansing — The Michigan House approved a 12-bill package Wednesday designed to generate $1.16 billion for road repairs that relies heavily on existing tax revenue and eliminating a tax break for the poor.

The plan is the Republican majority’s response to the crushing Michigan voter defeat of a sales and gas tax proposal on May 5. More than $700 million of the funds would come earmarking a portion of the state’s income and sales taxes for the state’s transportation fund.

House Speaker Kevin Cotter, R-Mount Pleasant, said the plan will require lawmakers to reprioritize general fund spending in favor of road repairs.

“It’s like putting a mortgage on auto payments,” Cotter said. “You take care of the needs before the wants.”

The House plan redirects $135 million in economic development funds to the transportation fund and raises about $119 million in additional revenue from a new fee for hybrid and electric vehicles, an increase in the diesel tax rate from 15 cents per gallon to 19 cents and future inflationary increases in fuel taxes.

Rep. Marilyn Lane, D-Fraser, called the reliance on existing tax revenue sources for roads repairs “Monopoly on steroids.”

The road funding plan faces an uncertain future in the Senate, where GOP Majority Leader Arlan Meekhof has expressed opposition to raiding the state’s economic development funds to fill potholes. Gov. Rick Snyder also has publicly opposed tapping the Michigan Economic Development Corp.’s budget to make up for a $1.2 billion road funding deficit.

“We know certain bills are dead on arrival by the governor,” said Rep. Sam Singh, D-East Lansing. “Other bills are dead on arrival by the Senate.”

Democrats decried the elimination of the Earned Income Tax Credit, which would result in low-income families being unable to claim the tax credit on their income tax form — an estimated loss of $123 million.

“I haven’t heard anyone who voted against Proposal 1 say that they want us to stick it to poor people even more,” said Rep. Brandon Dillon, D-Grand Rapids. “This is plain mean.”

The House approved the bill on a narrow 57-52 vote, with six Republicans joining Democrats in opposition.

Unlike Proposal 1, which required a bipartisan deal the week before Christmas, Republicans pushed through the plan without Democratic support. Voters defeated Proposal 1 with a record-setting 80 percent “no” vote.

“When you get mercy ruled, when you have a blowout, you don’t worry about the analysis. You change the plan,” said Rep. Al Pscholka, R-Stevensville.

Republicans hold a 63-seat majority in the House, where 56 votes are needed to pass a bill.

“This is all about House Republicans pretending like they're doing something so they can pat themselves on the back ... and go home for the summer,” said House Minority Leader Tim Greimel, D-Auburn Hills.

Rep. Alberta Tinsley-Talabi, D-Detroit, decried the elimination of the earned income tax credit, which amounts an average of less than $300 for a qualifying low-income family.

“Have we got any compassion for these Michigan citizens?” Tinsley-Talabi said. “When do we stop kowtowing to the corporate elite and help the least?”

Rep. Ed McBroom, a dairy farmer from the Upper Peninsula’s Dickinson County, said he received the EITC a few years ago. But he supported elimination of the tax refunds in favor of more money for roads.

“This money can be better spent for all the families of Michigan,” said McBroom, R-Vulcan.

Dillon noted past praise of the federal Earned Income Tax Credit by Republican President Ronald Reagan and U.S. Rep. Paul Ryan of Wisconsin, the GOP’s 2012 vice presidential nominee.

“You must view them as Marxists for supporting this,” Dillon said to Republicans on the other side of the aisle.

The Michigan Catholic Conference opposed the elimination of the EITC, which lawmakers trimmed in 2011 to balance the budget and help pay for a $1.8 billion tax cut for businesses.

“While almost every Michigander recognizes the need to finance road repairs, we are disappointed to see these funds shifted away from the working poor,” said Tom Hickson, vice president for public policy and advocacy for the Michigan Catholic Conference. “The EITC is a powerful tool that helps people transition into a more stable situation.”

Business Leaders for Michigan, a group of corporate executive and higher education leaders, also opposed the House package.

“The House road funding plan is the wrong direction for Michigan,” said Doug Rothwell, the group’s president and CEO. “Michigan needs a permanent, long-term solution to increase road repair funding without raiding the General Fund and hurting other critical priorities that are important to our economy.”

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