A deal has been completed at the Michigan statehouse to raise $1.2 billion annually for roads and bridges.
Working into the early morning hours on Friday, House and Senate lawmakers signed off on an 11-bill, two-resolution road and bridge package. The main part of the package calls for increasing the state sales tax rate from 6 percent to 7 percent.
Voters will get the final say on the proposed changes in a May 2015 election.
Another significant change calls for ending collection of the 6 percent sales tax added to fuel purchases on Oct. 1, 2015. The state’s excise tax rates would also be converted to a percentage rate that would gradually increase over time.
The plan calls for converting the state’s existing 19-cent-per-gallon gas tax and 15-cent-per-gallon diesel tax to a wholesale rate, which would allow tax collections to increase with inflation.
Gov. Rick Snyder said during a press conference announcing the deal that the change would result in an immediate 3-cent-per-gallon increase on gas and diesel.
Supporters point out that all fuel tax revenue would be spent solely on transportation work.
“We passed a bipartisan, long-term solution for road funding that ensures the money spent at the pump actually pays for the roads,” Senate Majority Leader Randy Richardville, R-Monroe, said in prepared remarks.
Also approved is a change that would raise $50 million by charging more for oversize/overweight truck permit fees. Registration fees for commercial trucks would also be increased.
Snyder called on state lawmakers to get a deal done before the end of the year. He turned up the heat on election night and continued to apply pressure until the votes were taken in Friday’s pre-dawn hours.
Snyder said the deal 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.
House Speaker Jase Bolger, R-Marshall, said the changes approved by lawmakers will go a long way to right the wrongs of the past, which put the state in the situation they now find themselves.
“It was vital to us that all taxes paid at the pump go to roads, because that was the structural flaw that led to this problem,” Bolger said.
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