Michigan roads plan would nearly double diesel tax

By Keith Goble, Land Line state legislative editor | Friday, January 27, 2012

A bipartisan bill package was unveiled this week at the Michigan statehouse to raise $1.04 billion for transportation infrastructure. The plan includes a first-of-its-kind initiative to eliminate the state’s excise tax on fuel and replace it with a wholesale tax.

The funding package of nearly 20 bills closely follows a plan outlined by Gov. Rick Snyder to lawmakers during the fall. To address a $1.4 billion shortfall simply to maintain the current system, the Republican governor called for lawmakers to increase transportation funding and improve roads, bridges and public transit.

Among the dramatic reforms sought to Michigan’s transportation user fees is an initiative to eliminate the state’s 19-cent-per-gallon gas tax and 15-cent-per-gallon diesel tax in favor of a new wholesale tax on fuel.

Shifting tax collection to the wholesale price would result in a 28.3-cent tax, raising $541 million – more than half the amount sought to benefit infrastructure throughout the state.

A provision in the bill would ensure the wholesale tax rate does not rise or fall more than 1 percent each year. The sales tax applied to fuel purchases would not be affected by the change.

Snyder has said the change is a more viable long-term funding approach. The percentage tax would tie revenues to the pump price as it rises and falls instead of linking it to fuel consumption.

Another $500 million would come via increases to vehicle registration fees. The fees would be determined on a percentage basis instead of a flat rate. Weight-based fees for commercial vehicles would increase 25 percent.

The funding package includes a bill to create a regional transit authority in southeast Michigan. Another bill authorizes regional authorities to ask voters to approve an option regional registration fee for transit.

Democratic leaders said the funding package shows that transportation needs are front and center on the legislative agenda.

“This bipartisan package of bills is a good place to start the discussion about what we need to do to maintain our infrastructure now and prepare for our state’s future needs,” House Democratic Leader Richard Hammel of Mt. Morris Township said in a statement.

Also addressed in the package are the Michigan truck drivers and many other residents who are resistant to paying more for transportation. A common complaint is the mismanagement of revenue already available.

Plans include a requirement for transportation agencies in the state to follow certain “best practices” to help ensure all road projects are competitively bid. State law now requires the process solely for projects in excess of $100,000.

To view other legislative activities of interest for Michigan, click here.

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