Progress is being made toward a long-term funding solution within the Legislature as House Republicans introduced an 8-bill funding package that raises $3.1B annually for Michigan’s transportation network. The bill package mirrors what Speaker Matt Hall proposed earlier in the year, utilizing existing state funds to increase the transportation budget.
The most significant part of the overall proposal addresses the biggest policy problem in the funding debate: sales tax on motor fuel. Michigan is one of five states that assess sales tax on gas yet uses virtually none to fund our roads and bridges. For decades, MITA has advocated removing the sales tax on fuel and increasing the state’s excise tax on gas by the equivalent amount, raising $1 billion more for roads and not increasing the overall tax liability at the pump. $700 million collected from sales tax on gas currently goes to education. There is a strong desire within the legislature to ensure that this policy change does not cut education funding.
The remainder of the $3.1 billion proposal, approximately $2.2 billion, is taken from existing state revenues collected through the Corporate Income Tax. These investments are not Constitutionally guaranteed to go to transportation funding. They will have to be protected in future years, especially if the state’s economy experiences a downturn and it finds itself in a budget crisis like 2007. As the need for more investments in roads and bridges increases, defending anything that passes will have a lot of support for years to come.
Governor Whitmer has also proposed a $3 billion road funding proposal. Her proposal relies on a mixture of tax increases and current state revenues to raise $3 billion more for roads and bridges. Although details are scarce, suggested revenue sources include a tax on deliveries for online purchases, an increase to the corporate income tax, and fees on digital advertising.
Both proposals include making sure all taxes paid at the pump go to transportation funding, and both suggest using at least $500 million of existing state revenues. Having both sides in agreement on half of the proposed revenues is a great start to the negotiations.
It is expected that the House Transportation and Infrastructure Committee will have hearings on the bills over the next few weeks. How the Democratic-controlled Senate will respond if the bills are able to pass the House is yet to be seen. MITA staff will keep the membership updated as things progress. This is the very beginning of the legislature process, and there is a long way to go, but things are headed in the right direction.
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.
