Gov. Rick Snyder this week signed a $1.2 billion spending package to aid Michigan’s road and bridge system. The multi-bill deal includes a 75 percent increase in the state’s diesel tax rate.
The main part of the Republican-led package raises the state’s 19-cent-per-gallon gas tax rate by 7.3 cents to 26.3 cents on Jan. 1, 2017. The 15-cent diesel rate will increase by 11.3 cents to 26.3 cents.
The diesel rate will also be collected on large trucks fueled by natural gas running interstate.
Additionally, the tax rates will be linked to the consumer price index in 2022, which allows tax collections to increase with inflation.
Changes in the fuel tax rates are estimated to raise $400 million annually.
Gov. Rick Snyder labeled the spending package as a “fiscally responsible, comprehensive transportation plan that provides a long-term solution” for transportation infrastructure.
“Residents and visitors alike deserve much better than what we drive on today,” Snyder said in prepared remarks. “This targeted, ongoing investment will help preserve and fix our infrastructure now and in the future.”
Another component in the package increases vehicle registration fees on Jan. 1, 2017, by 20 percent for cars and large trucks. The fees are expected to generate about $200 million per year.
The package also authorizes an annual transfer from the state’s $9.9 billion general fund to roads. The first transfer will shift $150 million between the accounts and increase to $600 million by 2021.
Critics of the package said it will take five years for the state to build up to the $1.2 billion in annual revenue touted by supporters. House Democrats also cited concerns that transferring money from the general fund will hurt programs that include public safety, education and health care.
“The Republican proposal raises taxes on middle-class families, does nothing to lower truck weights, and drains funding from education and public safety,” House Democratic Leader Tim Greimel of Auburn Hills recently stated. “Even worse, it doesn’t even start fixing our roads until 2021.”
House Speaker Kevin Cotter, R-Mount Pleasant, said the new funding deal solves the state’s long-running transportation funding crisis.
“Everyone in Michigan knows our roads are a mess and that they have been that way for far too long,” Cotter said in a news release. “... We need a real solution that fixes our roads and keeps them in good condition for the foreseeable future. This is that plan.”
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