Michigan Senate votes to use some sales tax for roads

By Keith Goble, Land Line state legislative editor | Thursday, March 29, 2012

The Michigan Senate approved a bill that would make sure more money collected at the fuel pump is used on pavement. The change could apply another $136 million a year to roads in the state.

When truckers and other drivers fuel up in Michigan, the tax money is distributed to the state’s fuel excise tax, the federal fuel excise tax, and the state’s sales tax.

The state excise tax on gas is 19 cents per gallon while the diesel tax is 15 cents per gallon. The federal portion of the tax is 18.4 cents per gallon and 24.4 cents per gallon, respectively.

Michigan law applies the excise taxes to roads but not the 6 percent sales tax. All but 2 percent of the sales tax revenue is routed to the state’s general fund. The rest is applied to the school aid fund.

The bill would earmark a portion of state sales tax revenue to help fix and maintain roads. Now, sales tax is imposed on motor fuel purchases, but none of the revenue goes to roads.

Sen. John Proos, R-St. Joseph, said his bill would help address road funding needs with resources already available – and without raising taxes.

“My bill would help solve this problem by using funds already paid by consumers at the pump and investing them in our roads,” Proos stated.

According to the bill analysis, the switch would claim as much as $136 million annually for roads from the general fund.

Gov. Rick Snyder has said the state is faced with a $1.4 billion shortfall simply to maintain the current road system. He called on lawmakers to pursue initiatives to reduce the funding gap.

Proos said his bill would help qualify the state to receive federal matching funds that would add another $400 million in road funding.

“Improving our roads is critical for us to compete for jobs in an economy increasingly dependent on the efficient transportation of goods,” Proos stated.

The bill – SB351 – is awaiting consideration in the House Transportation Committee.

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

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