House Speaker proposes raising gas taxes to help fund roads

This April 16, 2015 photo shows the Michigan Capitol in Lansing, Mich.

LANSING, Mich. (AP/WOOD) — Republican House Speaker Kevin Cotter is proposing a plan for increasing the long-term funding available to repair Michigan’s roads.

The plan comes eight days after state voters overwhelmingly defeated a road tax referendum.

Cotter told The Associated Press his plan would raise more than $1 billion for roads by tapping into restricted funds that now support economic development programs, allocating a portion of money from projected growth in the general fund, and eliminating the Earned Income Tax Credit for low-income families.

The plan would also raise the diesel tax to 19 cents to match the gas tax, then index both to inflation, and levy a user fee on hybrid, electric and other alternative-fuel vehicles.

Here’s how Cotter says the money breaks down:

  • Ditching the Earned Income Tax Credit and raising the diesel tax would net $162 million.
  • Redirecting restricted funds — including tobacco settlement cash from the 21st Century Jobs Fund, tribal gaming compact money and film subsidies — would be another $185 million.
  • Allocating anticipated revenue growth would account for $700 million when fully implemented.

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Among House Republicans, there was caution optimism that the plan may be able to get the 56 votes needed to pass.

“I think … we can actually get to about $300 million this year in the ’16 budget, so we’re actually a little bit ahead of where the speaker’s projected for the first year,” Rep. Al Pscholka, R-Stevensville, said.

But the plan is nowhere near a done deal. Minority Democrats won’t like getting rid of the Earned Income Tax Credit, which would have tripled had the roads referendum passed). Republican Gov. Rick Snyder has expressed concerns about using the restricted funds. And the GOP-led Senate may unveil its own plan within a couple weeks, Majority Floor Leader Mike Kowall said.

“This absolutely won’t be done overnight,” Rep. Lisa Posthumus Lyons, R-Alto, said. “This is something we’ve been discussing over the last several years. In fact, I likened Proposal 1 to ‘Plan D’ as opposed to when people say, ‘What’s our Plan B?’ We’re really on Plan E here.”

Even Cotter admitted his proposal is merely a starting point.

“My hope is that it is also evident with the members that we have here today, evident that House Republicans are focused on a road funding solution,” Cotter, of Mount Pleasant, said. “The fact that our members are here with me today should not be seen as an endorsement of this particular plan but rather an endorsement of the commitment of putting forth a road funding solution, and that’s exactly what we’re starting here today.”

Sen. Kowall, R-White Lake, on Tuesday announced that the Senate’s summer session would be expanded to deal with the roads issue.

Lawmakers typically break in June and don’t return until September except for holding an occasional session if needed, but Kowall added 30 days to the calendar. He told reporters it’s “obvious” that legislators need to improve the roads and “we heard the people loud and clear.”

It’s unclear if the House will be in session in July and August.

24 Hour News 8 Political Reporter Rick Albin contributed to this report.

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