Our Editorial: Pave way for road funding compromise
Michigan lawmakers are away from Lansing for the next month, but they need to make good use of their summer recess by finding a compromise on road and infrastructure funding. Three varying plans now exist, and each contains some valid ideas for fixing roads. Legislative leaders need to pull the best funding ideas from each and get this settled.
Because, as all Michiganians who drive are aware, the roads aren’t getting better on their own—they’re only getting worse. And the longer the Legislature waits to find a comprehensive, long-term solution, fixing the roads will only become more expensive.
Following the failed ballot proposal in May to raise the state sales tax for roads, lawmakers have scrambled to come up with a plan B.
Some aspects of the proposals hold more promise than others. At the end of June, the Senate passed a feasible proposal that includes a fair mix of new and existing revenue. Republicans are wary to raise taxes, but the reality is some additional funding is going to be required, as Gov. Rick Snyder has stressed for four years.
The $1.4 billion Senate plan calls for a three-year phase-in of a 34-cents-a-gallon fuel tax, which would be indexed to inflation. The gas tax is currently 19 cents a gallon, and hasn’t been increased since 1997. The plan is also tied to potential income tax reductions.
Half the money would come from the higher gas tax, but the other $700 million would come from existing revenue.
This is a solid proposal, but House Republicans are balking at raising that much new money at the pump. They passed their own plan earlier in June and don’t seem too eager to work out a deal with the Senate.
The House’s plan would raise $1.16 billion, but it centers on finding funds within the current budget. While the Senate’s vision for roads is more realistic, the House does offer a few good suggestions. For instance, lawmakers want to bring parity to diesel and gasoline taxes, increase registration for electric vehicles and ensure work quality guarantees.
House Democrats have also come out with a plan. But it relies too heavily on raising taxes on businesses, including a $530 million increase in the corporate income tax.
Michigan’s comeback has been fueled by reform of the business tax and regulatory codes to make the state more competitive. With the economy just rebounding after more than a decade of decline, restoring the shackles on business would be a tremendous error.
But there are elements of the Democratic proposal that might find their way into a final agreement, and help win minority party support for a deal.
For example, the plan calls for reforming vehicle registration requirements to raise $103 million. It would also divert $100 million of the sales tax on fuel to road repairs.
One unique element of the Democratic proposal would gain $225 million from capturing some of the earnings utility companies might receive if the electric market is re-regulated. It’s worth discussing the impact of the proposal with utilities, who might find it a fair trade-off.
Rich Studley, CEO of the Michigan Chamber of Commerce, thinks there are positive elements in these respective plans, but that lawmakers need to find the impetus to get this work done.
“The building blocks are all there in one way or another,” Studley says. “The question is now about leadership and political willpower. Stop worrying about 2016 and start working together to fix this problem.”
There are good ideas on the table in Lansing. Now it’s a matter of lawmakers coming together and making the tough decisions necessary to solve Michigan’s pothole problems.