NOLAN FINLEY

Finley: Road deal too elusive, too long

Nolan Finley
The Detroit News

Since before Labor Day, the four leaders of Michigan’s Legislature and Gov. Rick Snyder have had an agreement in principle for raising $1.2 billion to fix Michigan’s roads.

So why are we now in mid-October, and again at an impasse in talks on a road funding deal?

A solution continues to bump against entrenched members of both the Republican and Democratic House caucuses. What the governor and so-called Quadrant of legislative leaders agreed on was a split of $800 million in new taxes and $400 million in reprioritized spending. But so far, they’ve not been able to line up enough lawmakers to support either that formula or the details of making it work.

Going into a negotiating session Tuesday, one of those at the table told me “we keep getting closer.” And then a couple hours later the bargainers declared an impasse.

There are a number of sticking points, but the deal breaker this time is whether to off-set an increase in fuel taxes with a cut in the individual income tax rate. Republican House members are demanding all revenue above the rate of inflation be refunded to taxpayers.

Democrats worry that will lead to deeper spending cuts, as is the governor, though he reportedly would support a tax cut if it is phased in long-term and doesn’t cut into the General Fund dollars needed for roads. His plan is to account for much of the $400 million General Fund contribution with future revenue growth.

Some Democrats want to leverage a roads bargain to derail the proposal to repeal the prevailing wage law, which guarantees union pay scales on public construction projects. But so far, leaders have kept that issue away from road talks.

The tax relief dispute should not queer the deal. At least part of the reason it has become a hold-up is rooted in term-limits. The Quadrant leaders, for the most part, are new to this game. House Speaker Kevin Cotter is navigating a tough negotiation for the first time; it’s a learning process, and he hasn’t had the time figure out how to control his caucus.

Though Cotter has committed to the $800 million in new revenue, when I was on Mackinac Island two weeks ago for the state Republican Leadership Conference, GOP representatives were adamant that they would not go above $600 million.

They seemed convinced if they sent that bill, passed with all Republican votes, to the governor, he’d be forced to sign it. But Snyder’s people say he will veto a bill that drains too much, too soon from the General Fund. The governor has other worries, most notably that the expansion of Medicaid will cost far more than he anticipated. He’ll also need funds for his Detroit Public Schools reforms, and, as the Flint water crisis has shown, for other infrastructure projects.

The solution agreed to by the governor and the Quadrant requires a 7 cent fuel tax hike, and roughly a 40 percent increase in vehicle registration fees, along with the General Fund dollars. That’s a steep ask of taxpayers, but as the governor has noted many times, the tab for fixing vehicles shaken apart by bad roads is far greater.

The governor is said to be frustrated that lawmakers won’t rally to the agreement forged with the Quadrant. But an impasse is not an option. Back to work, guys, and keep working until the job is done.

nfinley@detroitnews.com

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