Michigan House passes Bolger alternate road plan

Chad Livengood and Gary Heinlein
Detroit News Lansing Bureau

Lansing — The Michigan House voted Thursday to divert $1.2 billion in sales tax revenue generated from fuel sales for schools and cities and dedicate it to road repairs — injecting a new proposal into the Legislature’s years-long debate on transportation funding.

The GOP-run House’s passage of the funding plan sets up a lame-duck showdown with the Republican-controlled Senate and Gov. Rick Snyder over how to generate more money to fix the state’s crumbling roadways.

It was immediately derided by Democrats, who called the plan a “charade.”

Speaker Jase Bolger’s plan seeks to accomplish the goal of House Republicans to not increase overall fuel taxes and ensure all taxes on fuel go toward road repairs.

The House voted 56-53 to repeal the sales tax by 1 percentage point annually starting in 2016 and ending in 2020. Under Bolger’s plan, the sales tax would be a replaced by a corresponding increase in a new gas tax.

Democrats blasted the bill because it could reduce available revenue for schools and cities by as much as $1 billion annually after six years.

“This is not a solution for the roads. This is a charade. This is a con game,” added Rep. Sam Singh, D-East Lansing. “All this does is kick the can down the road.”

The Legislature has two weeks remaining in this session to negotiate a compromise.

The Bolger plan relies on modest growth in sales tax revenue in order to ensure schools and cities don’t suffer future state funding reductions. That didn’t sit well with one of the three Republicans who voted against the plan.

“My biggest problem is the lack of new revenue in this package of bills,” said Rep. Dave Pagel, a Berrien County Republican. “I think we need to get serious about revenues for this (road) problem.”

Bolger’s plan would convert the current 19-cents-per-gallon gasoline tax and 15-cents-per-gallon levy on diesel fuel into a 7.5 percent tax on fuel at the wholesale level. Every year, as the sales tax is removed by 1 percentage point, the wholesale tax would be increased, ending at 13.5 percent after six years.

During the six-year phase-out period, the legislation contains a clause to ensure funding for schools and cities cannot be reduced from the previous year’s level, Bolger spokesman Ari Adler said.

If sales tax revenues don’t meet projections, Adler said, future lawmakers would either have to cut the state budget elsewhere or the “whole program resets” and the 6 percent sales tax on gasoline would be restored.

“If you believe in this bill, you believe in faith-based economics,” said Rep. Brandon Dillon, D-Grand Rapids. “To say this bill is an accounting gimmick insults accounting gimmicks. This bill should have been referred to the committee on hocus pocus.”

Rep. Joe Graves, R-Argentine Township, said the bill creates a “protected bottom” for K-12 schools and municipal funding for the next six years.

“We have sent a message as conservatives that our priorities have been clear: roads, public safety and K-12,” Graves said.

Bolger has said growth in sales tax revenue could make up for the lost revenue, but the plan caused unease among some members of the Republican caucus, particularly those who will be back next year. Bolger is term-limited and leaving office at year’s end.

“We have to make sure that we’re not going to taking away anything from the schools,” said Rep. Ken Goike, a Macomb County Republican.

Rep. Marilyn Lane, D-Fraser, said Bolger’s plan “won’t get us the money we need to fix the roads.”

“It’s not the plan we’ve been working on for four years,” Lane said.

Snyder has embraced a competing road funding plan the state Senate passed last month that would essentially double the state gas tax.

Senate Majority Leader Randy Richardville’s plan calls for replacing the 19-cent gas tax and 15-cent-per-gallon diesel tax with a wholesale tax that would start at 9.5 percent April 15 and increase over four years to 15.5 percent by Jan. 1, 2018.

Richardville’s bill would generate an extra $1.2 billion annually by 2018.

Rep. Mike McCready, R-Bloomfield Hills, said he likes elements of both plans, but he leans toward Richardville’s proposal because it generates more revenue over four years instead Bolger’s six-year approach.

“We’ve got to get something moving here,” McCready said.

Snyder this week tried to ramp up pressure on lawmakers to take action by highlighting fractured pavement and crumbling bridge decks on highways in Detroit and Grand Rapids.

The Republican governor and his transportation director Kirk Steudle plan to continue their blitz Friday by surveying “poor infrastructure conditions” near the Interstate 96 and Cedar Street junction on Lansing’s south side, according to Snyder’s office.

The road funding debate capped a day in which the House veered off into a divisive social and environmental issues.

The Republican-controlled House passed a divisive bill creating a new legal defense for religious liberties. Republicans also pushed through a bill to allow municipal trash and tires to qualify as a “clean, renewable” energy source.

“That makes a mockery of renewable energy and makes a mockery of this Legislature,” Singh said.

Rep. Ed McBroom, a Republican from the Upper Peninsula, defended the idea that trash and old tires should qualify as a renewable source of energy for electricity-generating incinerators.

“When I think about renewable energy, I think about energy that continues and doesn’t get used up and the last time I checked we haven’t used all of our trash,” McBroom said.