Senate GOP considers smaller gas tax hike for roads

Lansing — Michigan Senate Republicans who balked at Gov. Gretchen Whitmer’s 45-cent fuel tax hike proposal are considering whether they could support a smaller increase as part of a larger plan to fix the state’s crumbling roads.

But House Republicans and Speaker Lee Chatfield appear wary of the idea as GOP leaders begin to discuss ideas with rank-and-file members returning from summer recess.

The upper chamber convened Tuesday morning for the first time in two months, but Senate Republicans quickly adjourned and left the Michigan Capitol for an off-site caucus meeting to discuss roads, the budget and more.

Road construction crews do road work along I-696 near Ryan Road in 2018.

“We’re not there yet,” said Sen. Wayne Schmidt, a Traverse City Republican who chairs the transportation budget subcommittee.

Schmidt told reporters GOP leaders are “still working" on an alternative to Whitmer’s road funding plan, which would give Michigan the highest fuel taxes in the country and has been denounced by Republicans.

MIRS subscription news reported Monday that Senate Majority Leader Mike Shirkey, R-Clarklake, is floating the possibility of either a 20-cent gas tax increase or a 10-cent hike paired with a teacher pension debt swap proposal that could free up cash for roads.

Shirkey said Tuesday afternoon he has “no clue” where the gas tax speculation came from but would “like to know.” The apparent leaker “wasn’t me,” he said.

Republican leaders are “making progress” in talks with Whitmer, Shirkey said after emerging from the off-site caucus meeting that lasted less than two hours.

Schmidt confirmed Republicans are discussing whether a fuel tax increase of some kind is warranted but said there is “no specific plan” on the table. The House does not return to session until next week.

“There’s all sorts of things out there being discussed,” Schmidt said. “We’ve got to make sure that whatever we decide as a caucus, and working with the House and the governor, it’s going to have enough votes to pass.”

Sen. Ken Horn, R-Frankenmuth, said the caucus meeting was a “high-level” talk that did not include in-depth debate on new road funding ideas.

“Personally, I’d like to see the budget (done) first and then see what (happens on roads),” he said. “The one thing I’m hearing from my district is, ‘No new taxes.’ So is there another way? I don’t know.”

As The Detroit News previously reported, Republicans are working to identify other budget cuts to find money for roads and have debated the possibility of extending the state’s 6% sales tax to transportation services like Uber and Lyft.

The Michigan Chamber of Commerce on Tuesday held a press conference trying to increase the pressure on lawmakers to find a road funding solution. 

Chamber CEO Rich Studley urged officials to find $2 billion to $2.5 billion a year in new revenue for the state’s crumbling infrastructure, noting that passage of such funding will be a “key roll call vote” that could win or lose the encouragement and “support” of the chamber.

Lawmakers returning from their summer recess should consider the message “both a pat on the back and a kick in the pants,” Studley said.

“We’re going to approach this in a positive way, but I think that lawmakers who choose to support the status quo, lawmakers who say there is not a problem, lawmakers who are in favor of bad roads will have a lot of explaining to do back in the district,” he said.

The state and regional chambers of commerce are approaching upcoming negotiations and discussions with “optimism and urgency” stemming in part from the consensus Whitmer and legislative leaders were able to reach on auto insurance reform earlier this year, he said.

“We need a real solution to a real problem, and we really need it right now,” Studley said.

Currently, the only solution on the table that could generate the needed $2 billion to $2.5 billion is Whitmer’s proposed 45-cent gas tax increase, business leaders said.

“The governor’s proposed one way, it’s a viable way, but we’re open to seeing if there are other options out there as well,” said Doug Rothwell, president and CEO of Business Leaders for Michigan.

Senate Minority Leader Jim Ananich, D-Flint, argued that if Republicans pursue a smaller fuel tax hike, it must be coupled with other ideas to eventually generate the $2.5 billion a year proposed by Whitmer.

“There’s no point in raising taxes just enough to not fix the roads,” he said.

Ananich told The News that Republicans have not engaged him in road funding talks since May. While GOP leaders have met with Whitmer, Ananich compared their long-awaited roads plan to the Fyre Festival, a disastrous 2017 island event in the Bahamas that was heavily promoted but poorly executed.

He later tweeted out a picture of a cheese sandwich, referencing the poor-quality food served at what had been hyped as a luxury festival.

Whitmer has pressured Republicans to publicly release an alternative road funding plan so they can begin final negotiation on a state budget that must be complete by Oct. 1 to avoid a state government shutdown.

The Democratic governor has said she will veto any budget without a “real” road funding plan but has also signaled she’d be willing to sign a temporary continuation budget if she and GOP leaders need extra time to work out a final deal.

Schmidt noted the 2020 budget approved by the Senate in May included “record” funding for roads and would have accelerated a 2015 law by redirecting more income tax revenue to roads.

Republicans completed the budget process by June in recent years under GOP former Gov. Rick Snyder, who had also pushed for more long-term road funding.

“We’re continuing to kick around ideas and bounce them off various people,” Schmidt said. “It’s going to take some time. It’s not quite as easy as it has been the last eight years.”

Whitmer was expected to hold a budget round table with reporters in Lansing on Tuesday afternoon but her office canceled the event, citing a scheduling change.

“Talks are happening, but until Republicans put a plan on the table, they continue to be just conversation and not negotiations,” said Whitmer spokeswoman Tiffany Brown.

Whitmer unveiled her roads plan in March as part of her first executive budget proposal.

“168 days later, Gov. Whitmer is the only one to put a plan on the table,” Brown said.

House GOP spokesman Gideon D’Assandro declined to discuss details of a recent caucus phone call that MIRS reported on but said Chatfield is focused on “passing a budget that fixes roads while asking as little extra from Michigan families as possible.”

"Work is ongoing and progress is being made," he said.

Rep. Matt Maddock, a Milford Republican who chairs the House transportation budget subcommittee, opposes any kind of fuel tax increase and predicted upcoming budget negotiations will be "brutal" for like-minded conservatives. 

"There's probably going to be a lot of pressure put on us for a gas tax increase," he said. "It seems to me like the entire apparatus of Lansing is gunning for this thing... but I don't think the Michigan voters deserve another gas tax increase. They don't want it."

Sen. Rosemary Bayer, a Beverly Hills Democrat who sits on the appropriations committee. said House Republican reluctance to any kind of tax increase complicates the prospect of a road funding deal. 

“I understand why — they don’t like raising taxes — but we’re trying to create a long-term fix,” Bayer said. “And these short-term gaps, all it does it make people mad when we have to ask for more money later.”