, Land Line state legislative editor | Tuesday, August 25, 2015
The wait continues in Michigan for state lawmakers to reach a transportation funding deal.
House lawmakers returned to Lansing for three days last week to work on a possible fix for the state’s ailing road and bridge system. If unsuccessful, they will wait until after Labor Day to try again.
Republicans in the chamber are advocating for a $1.2 billion plan that would raise half of the money by increasing the state’s 15-cent diesel tax rate by 9 cents and the 19-cent gas rate by 5 cents, as well as raising vehicle registration fees. The other half would be raised by shifting $600 million from the state’s General Fund to transportation.
The general fund has a balance of about $9.9 billion.
However, Republican Gov. Rick Snyder and House Democrats are opposed to rerouting existing revenue from one budget to another. The governor said he is unwilling to jeopardize the state’s long-term fiscal responsibility.
Democrats also say they want money made available for mass transit to be included in the deal. In addition, they want Republicans to halt a petition drive to repeal the state’s prevailing wage law.
The Senate has approved a plan to increase the state’s excise tax rates over two years and route additional revenue to transportation.
The main part of the package calls for raising the state’s gas tax rate by 15 cents to 34 cents per gallon. The diesel rate would increase by 19 cents to 34 cents.
The gas rate would increase by nickel increments on Oct. 1, 2015, Jan. 1, 2016, and Jan. 1, 2017. The diesel rate would be raised by 7 cents on Oct. 1, 2015, and Jan. 1, 2016. Another increase of 5 cents would kick in Jan. 1, 2017.
Changes in the fuel tax rates are estimated to raise $822 million annually once fully implemented.
Additionally, the tax rates would be linked to the consumer price index on Jan. 1, 2018, which would allow tax collections to increase with inflation.
The fuel tax would also soon be applied to alternative-fuel commercial and personal vehicles.
The Senate plan would also take $700 million from existing income tax revenues routed to the General Fund and shift the money to roads and bridges.
The funding effort has been sent to a conference committee made up of Republicans and Democrats from both chambers. If an agreement is reached, the full Legislature could vote as soon as early September on a funding deal.
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