The Michigan House of Representatives passed a $3.1B road funding proposal this week, putting the debate and ball in the Senate’s court. With bipartisan support, House Republicans proposed a 9-bill package that addresses the long-standing problem of fuel sales taxes and redistributes existing state revenues to raise $3.1B annually.
Removing the sales tax on fuel and increasing the gas tax by the equivalent amount raises approximately $1B annually, which would go through the existing road funding formula. Another $2.2B is raised by redistributing revenues from the Corporate Income Tax (CIT) to roads and bridges. This new funding source would also be distributed differently than normal. The plan puts more emphasis and resources on the local transportation system. Of the $2.2B, county road agencies would receive 50%, cities and villages would receive 40%, and the state trunk line would receive the remaining 10%.
In addition to increasing the percentage, local roads would receive a separate bill passed that established the neighborhood roads fund. This fund puts aside $275M to be split between township and city roads without requiring the local units of government to provide matching funds for the construction projects. This measure proved to garner the support of the Michigan Townships Association and the Michigan Municipal League. That support was helpful in gaining support from a handful of Democrats, which led to the eventual passage of the bills.
MITA staff can’t stress this enough: this is the start of a lengthy legislative process. It is a great start, but a start nonetheless. The Democratically controlled Senate is not likely to pass the House plan that redirects existing money and will push for new revenue and new tax increases to fund Michigan’s road system. Eventually, the Governor and Legislative leaders will have to get together and hammer out a compromise. The pressure is undoubtedly on legislative democrats and the Governor as the public continues to demand a long-term, sustainable road funding solution.
The process of convincing the Senate to take up a road funding proposal started years ago and will continue with even more emphasis on urgency. MITA staff has continued conversations with Senate Majority Leader Winnie Brinks and her staff, and we are hopeful that the pressure of a funding solution in the Senate Chambers will be enough to convince the Senate to take up the House plan or provide a counter-proposal.
If you have any questions or concerns, please contact Rob Coppersmith, Executive Vice President, at robcoppersmith@thinkmita.org or Lance Binoniemi, Vice President of Government Affairs, at lancebinoniemi@thinkmita.org.
