Whitmer takes flak for calling 20-cent gas tax hike ‘ridiculous’
Lansing — Five months before proposing a 45-cent-per-gallon fuel tax increase, Michigan Gov. Gretchen Whitmer denied she planned to push a 20-cent increase, calling the claim “ridiculous.”
Whitmer’s comments from a televised 2018 gubernatorial debate resurfaced this week as the East Lansing Democrat unveiled a plan to “fix the damn roads” that would give Michigan the highest gas tax in the nation.
“Gretchen Whitmer wants to have a 20-cent gas increase,” her Republican general election opponent Bill Schuette said during the Oct. 12 debate in Grand Rapids.
“That’s ridiculous,” Whitmer replied, telling Schuette his assertion was “nonsense, and you know it.”
Whitmer on Tuesday presented to lawmakers a budget proposal that would raise fuel taxes from the current 26.3 cents in three 15-cent increments between October 2019 and 2020. The administration estimates the 45-cent-per-gallon increase would generate more than $2 billion a year in new revenue for roads.
Citing her debate comments as a candidate, critics accused Whitmer of misleading voters last fall.
The governor’s budget is “built on broken promises,” declared the Michigan Republican Party. “Whitmer trashes another campaign promise,” the conservative Michigan Freedom Fund said in an email blast.
As a candidate, Whitmer made “fixing the damn roads’ a top priority and indicated she would urge the Legislature to approve “user fees” to fund road repairs. But she did not specify a particular tax proposal.
Speaking with reporters after her budget presentation, Whitmer said the 45-cent fuel tax increase proposed Tuesday was “not always my plan.”
Instead, the governor said she worked with the Michigan Department of Transportation and the State Budget Office to analyze various ways to generate enough revenue to bring 90 percent of Michigan roads into good or fair condition.
“We thought a user fee that was actually the right size to fix the problem was the way to go,” she said.
Budget Director Chris Kolb on Tuesday laid out several alternative scenarios that lawmakers could consider to generate $2.5 billion a year. That administration target is similar to the $2.2 billion recommended in 2016 by a task force appointed by former Gov. Rick Snyder, a Republican.
Other options, Kolb said, include raising the state’s individual income tax rate from 4.25 percent to 5.3 percent, raising the Corporate Income Tax rate from 6 percent to 19.5 percent, raising the sales tax rate from 6 percent to 7.4 percent, raising vehicle registration fees by 180 percent or creating a new statewide property tax of 7 mills.
Kolb and Whitmer both invited lawmakers to propose a better alternative funding plan that actually fixes the state's crumbling infrastructure.
“We did undertake a lot of debate and explored a lot of different possibilities,” Whitmer said. “And this (fuel tax) was the smartest, quickest way to remedy the problem in a way that helped us address these other issues that are affecting our state.”
Senate Majority Leader Mike Shirkey, R-Clarklake, said Wednesday that he opposes Whitmer’s initial road funding plan, which will be the subject of significant debate as lawmakers work to complete the state budget by summer or fall.
“Citizens of Michigan — especially the folks that work for a living — cannot absorb a 45-cent increase in the gas tax,” Shirkey said. “They just can’t do it.”
However, Shirkey did agree on the overall need of roughly $2.5 billion in additional spending on roads.
That estimate “has now survived two administrations,” he said, referencing Snyder and Whitmer, “so I think we can conclude that is a consensus we can rally around.”
But “how to get there and how fast to get there ... are equally important” considerations, Shirkey said.
State Rep. Triston Cole, R-Mancelona, accused Whitmer of proposing a "completely unrealistic gas tax increase," likening it to a punt in football. "Her misguided proposal is not a conversation starter; it’s a wrench thrown into talks that are immensely important to everyone," he said.
New roads formula
Whitmer’s plan would generate an estimated $1.2 billion in new money for roads in fiscal year 2020 and a projected $2.5 billion when fully implemented in fiscal year 2021.
But Whitmer’s budget would also eliminate a general fund diversion planned under the 2015 road funding law signed by Snyder — set to reach $325 million in 2020 and $600 million in 2021. That shift would free up general fund revenue to cover university operation costs, which Whitmer wants to stop paying out of the School Aid Fund.
A portion of the new gas tax revenue — $21 million in 2020 and $42 million in 2021 —would also be constitutionally earmarked for the Department of Natural Resources Recreation Improvement Fund.
All told, the administration says the plan would increase dedicated road and bridge spending — not including one-time funding approved by lawmakers last year in supplemental budgets — by $917.5 million in 2020 and $2.1 billion in 2021.
Most of the additional revenue would go into a proposed “Fixing Michigan Roads Plan” and be spent through a new formula that would prioritize the state’s most highly trafficked roads, as opposed to areas with the most vehicle lane miles.
Nearly half of the funding — $1 billion, once fully implemented — would be spent on interstates and limited access freeways maintained by the state. Thirty percent, or $641 million, would go toward “principal arterials,” the most highly traveled non-freeway routes maintained by the state and local road agencies.
Additional funding would be spent on “minor arterial” roadways primarily maintained by local governments (7 percent), “major collector” local roadways (7 percent), local bridges (4 percent) and “multi-modal innovation projects (3 percent) that could include public transit, rail and mobility services.
Revenue from the state’s existing 26.3-cent gas tax, along with an equivalent portion of the $325 million in road spending that would have come from the general fund, would continue to be distributed through a traditional funding formula prescribed under Public Act 51 of 1951.
Critics say the 1951 formula usually favors rural communities over urban cores because it allocates road funding dollars partially based on lane miles, sending a disproportionate number of dollars to communities with sprawling roads rather than heavily trafficked ones.
The Whitmer administration is not proposing a rewrite, but “our roadways are in such a bad condition that we need to do a target repair focused mostly on those highly trafficked roadways with economic significance,” said Michigan Department of Transportation Director Paul Ajegba.
While Shirkey opposes the 45-cent gas tax hike proposal, Whitmer’s budget includes some “very intriguing and frankly creative ideas … that we need to explore,” he said.
The Senate GOP leader did not endorse Whitmer’s plan to spend additional dollars through a new formula but told reporters he wants to explore the details of her budget to determine “which ones we should leverage and which ones we should jettison.”
Senate Minority Leader Jim Ananich, D-Flint, said he thinks Whitmer’s plan to allocate the new road funding money “makes all the sense in the world.”
“When you put dollars toward roads, it should go to where people are at and where economic activity is first,” he said.
Ananich said he would vote for Whitmer’s budget proposal, which includes a “bold” plan for roads, but called it a “good starting point” for bipartisan negotiations.
“We’ll see what the counter proposal is and we’ll weigh both, but we have one on the table now, and I think that’s the place to start talking.”