Voters in Michigan will cast ballots on Tuesday, May 5, for a proposal that would raise $1.27 billion annually for roads and bridges once fully implemented.
Proposal 1 on the statewide ballot is the result of state lawmakers and Gov. Rick Snyder reaching a deal in December to raise taxes to generate about $2 billion each year for roads, education and more.
If approved by voters, the Michigan Constitution would be amended to increase the state sales tax rate from 6 to 7 percent. Collection of the sales tax on fuel purchases, however, would sunset this October.
A 10-bill package approved by state lawmakers in 2014 would also kick in. The package was tie barred to voter approval of the sales tax increase.
In addition to the new revenue that would come from the sales tax increase, the state’s excise tax rates would also be converted to a percentage rate that would gradually increase over time.
The state’s existing 19-cent-per-gallon gas tax and 15-cent-per-gallon diesel tax would be converted to a wholesale rate, which would allow tax collections to increase with inflation.
The change is estimated to result in an immediate 5-cent-per-gallon increase on gas and diesel.
Supporters point out that all fuel tax revenue would be spent solely on transportation work.
Critics say residents cannot afford to pay more taxes. They also note the sales tax increase would elevate Michigan to the second highest rate in the nation – tied with five other states.
Also tied into the package are higher truck fees that would raise $90 million. Specifically, another $50 million would be raised by charging more for oversize/overweight truck permit fees. Registration fees for commercial trucks would raise $40 million via a 34 percent increase over three years.
In addition, registration fee discounts for personal vehicles would be phased out and a new surcharge up to $100 would be collected for electric vehicles and hybrid vehicles. The two changes would account for another $62.6 million.
Snyder said the deal sent to voters was built around five principles: increase revenue for roads; protect funding for education and public transit; ensure that transportation taxes are used for transportation work; keep the state’s fuel prices competitive with neighboring states; and provide low-income tax relief.
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