Michigan House panels approve $450 million more in road spending, mostly by redirecting funds

5/7/2014

LANSING, Mich. — Lawmakers took an initial step today toward permanently spending more on Michigan’s deteriorating roads, mostly by redirecting existing revenue while also paving the way for gasoline taxes to grow with inflation over time.

The $450 million boost in transportation funding would be just a third of what Gov. Rick Snyder says is needed to bring the system up to par. But with legislators reluctant to approve a major hike in fuel taxes or vehicle registration fees, they’re looking primarily to existing sources of revenue in the face of public anger over potholes.

A constant source of frustration is that Michigan’s gasoline taxes are among the country’s highest while its per-capital transportation spending is among the lowest because the 6 percent sales tax on fuel primarily goes to schools and locals governments.

Legislation approved by the House Tax Policy Committee would keep education and revenue sharing to municipalities intact while sending $130 million per year in leftover sales tax collected at the pump to roads and bridges instead of the general fund. Another bill would set aside a portion of the 6 percent use tax on out-of-state purchases, $239 million in year one, solely for road and bridge projects.

The House Transportation and Infrastructure Committee also voted to convert the state’s 19-cents-a-gallon gasoline tax to one based on price while raising the 15-cent-per-gallon diesel tax to the equivalent of the gas tax. The diesel increase would generate $35 million a year more initially.

The state Treasury Department could decrease fuel taxes to limit revenue increases from one year to the next to 5 percent or the inflation rate, whichever is less. The agency also could increase the rates to ensure fuel tax revenue isn’t less than in the 2014 base year.

Proponents say if Michigan had moved to a wholesale gas tax when it last raised the per-gallon tax in 1997, it’d have the $1.3 billion Snyder is seeking today. Road agencies are getting less in state funding than a decade ago in part because people are driving less and with more fuel-efficient cars.

“We want to continue to improve upon what I think is a very, very good proposal,” said House Transportation and Infrastructure Committee Chairman Wayne Schmidt, R-Traverse City. “It’s going to get approximately $450 million to our roads to start fixing bridges. It’s what the people of the state of Michigan expect.”

Other bills sent to the full House would raise the cost of permits for oversized and overweight trucks to $500 — a five-fold or 10-fold increase — double fines for overweight trucks and revise some vehicle registration fees. The Republican-led House on Thursday plans to send its plan to the Senate, which is considering ways to raise more revenue than the House — a difficult proposition before the November election.

The legislation won bipartisan approval in the committees toay, though some Democrats abstained from voting. They criticized Republicans for putting all of the diverted tax revenue into roads instead of also disbursing a small share to public transit.

“There are people in your own district that can no longer drive. People are leaving the state of Michigan for cities that have better public transportation,” said Tom Zerafa, an Oak Park resident representing the Michigan Coalition for Human Rights.

Republicans also rejected Democratic amendments to spend the redirected money only to repair and update existing roads, not to build new ones.

“The last thing we should be wasting money on is new capacity,” said Rep. Jim Townsend, D-Royal Oak.