LANSING – Gov. Rick Snyder on Jan. 12 signed legislation that would start the long road back to restoring Michigan’s crumbling streets and bridges, in part by ensuring taxes paid by consumers at the gas pump are dedicated to that purpose.
“Michigan’s roads and bridges put lives at risk, drain family budgets and impede job growth,” Snyder said. His signature puts road funding legislation on a special May 5 ballot, and would increase the state sales tax from 6 to 7 percent as part of the plan to raise the money. “But we have an opportunity to change that. This plan makes long-term investments that will give motorists a safe, modern transportation system. It is a fair, thoughtful proposal that incorporates taxpayer protections and public transparency.”
A majority vote of the Legislature could have adopted road repair legislation any time over the past four years in which Snyder has been calling for more money to fix the roads – but they never did vote. A raise in the wholesale gas tax was a popular, but failed suggestion to raise the money. Instead, at the end of last year a bloc of GOP lawmakers refused to go on record as having passed any new taxes, instead adopting this plan, which allows voters to decide. But if voters don’t go along with this plan, it’s back to square one and the existing, wholly inadequate road funding plan.
The Michigan Department of Transportation has called for an annual funding increase of about $1.6 billion, or more every year to repair and maintain the state’s roads at a decent level.
According to Snyder’s office, if approved by voters, the Legislature’s action would raise an estimated $1.3 billion a year for transportation. After the first two years when debt reduction is a priority, it will include nearly $1.2 billion going to roads and an estimated $127 million for public transit. More than 60 percent of the road revenue will go to counties, cities and villages for their local road and bridge needs. The plan also protects revenue for schools and local governments.
Here is what is in the legislative package voters will be asked to approve on May 5:
*Removes the current sales tax on fuel and switching to a new wholesale tax for motor fuels (gas and diesel) that is more dynamic yet includes protections for consumers. Snyder explained that the current sales tax on fuel is constitutionally dedicated to the support of schools and local governments. It does not go for road maintenance. The ballot proposal will ensure that all state taxes paid at the pump will go to the support of transportation.
*Protects schools and local governments from lost revenue by asking voters in the May 5 election to approve a 1 percent increase in the state sales and use tax on retail purchases, taking it from 6 percent to 7 percent. The result is an additional $300 million a year for schools and $94 million a year for local governments.
*Supports state and local harbors, boating access sites and off-road vehicle trails with an additional $26 million a year when fully implemented.
*Provides tax parity by making the wholesale tax rates on diesel and gasoline equal.
*Assists low-income families by restoring the Earned Income Tax Credit to its full level. The credit was reduced in 2011.
*Requires that at least 20 percent of all maintenance contracts entered into by the Michigan Department of Transportation provide for payment based on performance outputs or outcomes. Michigan’s seven largest road agencies will be included in this system.
Increases the use of pavement warranties as much as possible, by establishing them on all projects where appropriate for state and local governments. There also is a reporting requirement under which the governmental entity must explain if it did not secure a warranty for a project over $1 million.
A Snyder spokeswoman said passing this proposal would the “top priority” for his administration this year. But for other groups it isn’t, yet, and passage is no sure thing. Special elections are notoriously difficult to predict. The Michigan Chamber of Commerce was on board with a legislative fix for the roads which included higher gas taxes, but has a more wait and see approach on the sales tax hike.
MITA, the Michigan Infrastructure and Transportation Association, which includes labor unions, is supporting the bill, not surprisingly. “We are officially four months away from an incredible opportunity to be an industry of game-changers!” a statement from the group says. “On May 5, 2015, registered voters in the state of Michigan will have the chance to vote in favor of a ballot proposal that will provide $1.2 billion for the industry. It’s time to prepare to GET OUT THE VOTE! Who’s with us?”