House OKs new roads plan with gas tax, fee hikes

Inside the rotunda in the Michigan Capitol in Lansing.

LANSING, Mich. (AP/WOOD) — A new plan to improve Michigan roads with higher fuel taxes and vehicle registration fees has been narrowly approved by the state House.

The Republican-controlled House voted late Wednesday night along party lines after road-funding talks among legislative leaders and Gov. Rick Snyder broke down last week. The governor says he has “some concerns” with the new legislation.

The House bills would raise $1.2 billion a year to bring roads up to par, but not until the 2020-21 fiscal year, when $600 million from the general fund would be devoted to roads.

House fuel plan general fund

The other $600 million would come from fuel taxes and registration fees. The 19-cents-a-gallon state gasoline tax would be increased by 3.3 cents in 2018. The 15-cent diesel tax would rise by 7.3 cents in 2017. License plate fees would increase by 40 percent starting in October 2016.

Unlike Proposal 1, which voters resoundingly rejected earlier this year, the latest House plan does not change the taxation method nor does it raise the sales tax or provide hundreds of millions in ancillary non-road spending.

“Let’s not continue to argue about the size of the problem,” state House Speaker Kevin Cotter, R-Mt. Pleasant, said. “We’ve spent a couple years doing that. That is not productive. We can agree a significant investment is needed. This plan is a significant investment. As to the sources of the revenue, we split it right down the middle … but we also did that in a very responsible manner. You heard some criticism tonight because this plan takes a period of years before all $600 million of general fund comes in. The reason to do that is we didn’t want to blow up the budget. So this is a very fiscally conservative and responsible plan that I believe is not only worthy of passage by our partners in the Senate but also a signature by the governor.”

Tuesday was a contentious day in Lansing as Senate Majority Leader Arlan Meekhof called for the House to take a vote on the roads plan he said was partially negotiated last week. The plan the House voted on Wednesday was not the same one Meekhof wanted.

“I am happy the House sent over an idea for the Senate to consider,” Meekhof wrote in a statement Wednesday evening. “I look forward to talking with the Governor and legislative leaders about the proposal. I have not had an opportunity to review the legislation, yet. The next step is for my fellow caucus members and I to review the details.”

The plan was the second passed by the House this year.

House Democrats opposed it, taking issue with the use of $600 million from the general fund and tax breaks they say only help the wealthy. They also say the plan wouldn’t generate appropriate funding quickly enough.

“This will not fix the roads, and it is fiscally irresponsible and unsustainable,” House Democratic Leader Tim Greimel of Auburn Hills said. “It will jeopardize funding for public safety and education and it will not be fully phased in until the year 2021. All the while, our roads will continue to get worse and worse. This is an inadequate, insufficient attempt to pretend like the Republicans are fixing the roads.”

The plan his party previously put forth would fund roads through reprioritization of funding, registration reform and changing existing tax breaks that they say help corporations and hurt families.

House Republicans say the plan is a compromise that will get the job done, highlighting changes to the income tax rate and to the Homestead Property Tax Credit that it says will provide $200 million in tax relief.

Cotter also released this statement on the package of bills Wednesday night:

“Road funding talks reached an impasse last week largely because everyone was so bound to their own preferred solution. Today, the House took a big step away from that and passed a plan that is far outside our comfort zone. That’s what it took to find a solution, so we did what needed to be done.

“First, the House passed a plan the Senate couldn’t accept, and then the Senate approved a plan the House didn’t like. This is the compromise that fixes our crumbling roads, meets in the middle and covers almost every priority the House, Senate and governor all said they wanted in a plan. Hopefully, we will see quick action on this compromise and a permanent solution to Michigan’s road funding crisis.”

The package of bills now heads to the state Senate for consideration, but it seems unlikely to pass there, 24 Hour News 8 Political Reporter Rick Albin suggests. A similar plan passed by the House earlier this year did not pick up any steam in the Senate and a conference committee has not come up with a compromise.

However, a source in Lansing told Albin on Thursday afternoon that while the House plan probably won’t be the final word, it may be a good starting point and that a conference on changes could be done in a few weeks, raising hopes again that some final deal could be stuck before the legislature takes its fall break.

>>PDFs: The House plan || House Fiscal Agency analysis

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