Conversations continue on long-term road funding solutions in response to Governor Whitmer’s $3.5 billion transportation bonding proposal approved in February. Earlier this week, the House Republicans introduced legislation to remove sales tax on motor fuel over three years while adding a revenue neutral excise tax to motor fuel. with all revenues dedicated to roads and bridges. Last week, the Senate Republicans announced that they are working on a plan of their own as well.
Currently, sales tax on motor fuel raises approximately $800 million and the proceeds generally go toward education. To backfill the loss of revenues to education and local units of government, legislation was also introduced to earmark that amount from the state’s income tax revenues. Sales tax on motor fuel is the largest public policy problem we have when it comes to the road funding debate. It artificially inflates our gas tax, while many of our citizens believe that the tax collected at the pump is going directly into road and bridge repairs. Unfortunately it doesn’t, even though Michigan citizens believe it should.
The approximately $800 million in generated revenue would be dedicated to local roads, in response to the Governor’s bonding plan that only covers MDOT roads. 60% of the revenues would go to counties and 40% would go to local road agencies. One of the biggest critiques of the Governor’s bonding program was that the money only went to highways and freeways and none of it went to local roads. The House Republican plan addresses that to some extent.
It has been reported that there are a small number of Senate Republicans working on a road funding plan, as well. Much like the House Republican plan, the goal seems to be to get more funding down to the local roads. MITA staff has met with the Senate Majority Leader recently, and he confirmed that they are working on something that he hopes to make public very soon.
The Governor’s bonding program will certainly open up many opportunities for the industry over the next five years and we will work hard to ensure that the conversations regarding a long-term, sustainable road funding plan continue within the legislature.
If you have any questions, please feel free to contact Mike Nystrom, Executive Vice President, at mikenystrom@thinkmita.org or Lance Binoniemi, Vice President of Government Affairs, at lancebinoniemi@thinkmita.org. They both can be reached at 517-347-8336.
