Mich. tax hike for roads requires risky statewide vote
Lansing — Gov. Rick Snyder and other advocates for increased transportation funding are betting that Michigan voters are fed up enough with inferior roads that they won't blink at a $1.7 billion tax hike whose centerpiece is a 1-percentage point sales tax increase.
It's a risky plan, especially if conservative interests spend heavily to urge its defeat and too many business groups that preferred a lawmaker-approved net gasoline tax hike decide to sit on the sidelines.
Major manufacturers spent almost $8 million ensuring passage of a complicated business tax cut that was on the August ballot — and which had minimal organized opposition. Selling the 7 percent sales tax to voters this May will be a heavy lift and require money.
"It's not a lock by any stretch of the imagination," said Sen. Mike Kowall, a White Lake Republican who put the odds of the measure's passage at 50-50.
The road funding plan includes elements that could make it more palatable to the public and a broad coalition of organizations likely to promote it.
Fuel taxes, at least initially, would stay the same because while per-gallon gas and diesel taxes would rise under legislation that would take effect only if the ballot proposal is OK'd, the sales tax on fuel would go away. It would ensure all taxes paid at the pump go to transportation infrastructure.
Schools and local governments, which would have lost revenue under an earlier House plan to eliminate the sales tax on fuel, would see $400 million a year more. Some 775,000 low-income households could claim an annual tax credit worth on average $300 more per family.
Organized labor wants to put thousands of people to work rebuilding highways and repairing bridges if the additional funding comes through. Drivers could more freshly remember pothole-ridden streets given the timing of the spring election.
Veteran Lansing public relations guru Kelly Rossman-McKinney said the pro side will face many challenges in a tight span of just four or five months — fundraising, settling on a message to voters and figuring out how and where to deliver it.
"This is tough. You're asking for a 'yes' vote on a tax policy. It's a big deal and I'm not sure that Michigan voters are going to be happy with the Legislature not taking on this issue themselves," she said.
But Snyder, who'd wanted the Republican-led Legislature to raise taxes on its own or at least pass a tax hike that would have gone into effect if voters rejected an alternative plan, said "compromise is not a dirty word."
He's expecting to spend "a lot of effort" talking to citizens and interest groups, like he did in favor of the business machinery tax changes approved last summer and against six constitutional amendments that voters defeated in 2012.
Term-limited House Speaker Jase Bolger, a Marshall Republican, said the plan is a fair way to improve the condition of rotten roads while not clashing with principles brought to the table by all sides.
"You could not check those boxes without going to a 7 percent sales tax. You cannot go to a 7 percent sales tax without a vote of the people," he said.
Opponents are likely to focus in part on how the plan would also boost school and municipal funding — a sweetener for voters but a possible pitfall, too.
"Back-room deals to score support for this proposal have resulted in an even higher price tag for taxpayers," said Scott Hagerstrom, director of Americans for Prosperity-Michigan.
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