GRAND RAPIDS, Mich. (WOOD) — Proposal 1 proponents Safe Roads YES! released a new TV campaign advertisement that has some people asking questions about exactly what the measure will fund and how.
“Nobody in Lansing will be able to take this road money and use it for something else. That’s a good thing,” the ad claims. “Every dime in taxes we pay at the pump will go to transportation. Guaranteed.”
Proposal 1 provides for a number of changes. One is increasing the sales tax to 7 percent. At the same time, it removes the sales tax from gasoline. Currently, drivers pay 6 percent for every dollar’s worth of fuel they buy. That money largely does not go to roads, but rather to schools, cities and elsewhere.
If the proposal passes, it would also trigger a law that would move the current gas tax from retail to wholesale and allow it to increase with inflation . That would push the gas tax north of 40 cents per gallon.
The claim that Proposal 1 would make all taxes paid at the pump go to transportation is true. What the ad carefully does not claim and what isn’t true is that all of the money generated from Proposal 1 goes to transportation.
The sales tax increase will not fund roads. It will instead help compensate for the money lost by ending the use tax on gas. It also generates more money than needed to replace the use tax, so some of the cash will go to schools, the earned income tax credit, revenue sharing and the general fund.
So while all the taxes you pay at the pump would go to transportation, not all the money generated by Proposal 1 would go to transportation. That is an important distinction.
“Transportation” is also a carefully chosen word. That is because Michigan’s Public Act 51 lays out how gas tax money is spent. Most of the money would go to roads, but a certain percent of transportation revenues would go to public transit, trains, trails, etc.
Proposal 1 does not change PA 51 — which has been in place for more than 60 years — but it has created some debate over the validity of claims the money goes to fix the roads.
With three weeks until voters go to the polls, there is still a lot of confusion and distrust surrounding Proposal 1. And the outcome of the May 5 election will have a huge impact on the state and the legislature moving forward.