Gas Tax Update

Gas prices reached $3.70 a gallon just before Memorial Day and legislators have been at a virtual standstill for months because of an impasse on the state budget. Many people have asked where this leaves the transportation funding effort.

Lobbying to Secure Major Increase in Transportation Investment

To date, a small group of MTT coalition members including MITA, the Michigan Chamber, Operating Engineers, CRAM and SEMCOG have met with over 70 legislators to pitch a $1 billion annual transportation funding increase. These meetings have gone quite well, with almost every legislator acknowledging a need for a substantial increase in transportation investment. The more difficult challenge has been getting policymakers to agree on a specific solution.

The proposal that is being pitched to legislators has been a 9-cent increase in the gas tax phased in over three years, a 50-percent increase in vehicle registration fees, diesel tax parity and a series of local-option taxes.

Our goal this year has been to get our transportation plan discussed and adopted at the same time as the overall 2008 state budget. Our mantra in our paid advertising campaign has been “Tell Legislators: Don’t Forget about our Roads”. We believe that the transportation-funding crisis is no less important than the overall state budget and that legislators would be less likely to vote for a revenue increase only a few short months after a general fund tax increase. Therefore, we have worked under the premise that it’s important the issues be tackled simultaneously.

Unfortunately, with all the focus being placed on the SBT replacement and the state budget, legislators have been able to accomplish very little. The spike in gas prices this spring also spooked supportive legislators and fence-sitters, who agreed that the state needed new investment in transportation dollars, but were not willing to do it at their perceived political expense.

Over the last several months, many components of our funding plan have been embraced as difficult but necessary. The area of greatest resistance has been with our 50-percent increase in the vehicle registration fee. From MTT coalition members to various legislators, we were finding it difficult to get the type of support we needed. Because we feel it is critical to include a vehicle registration increase in our overall proposal, we are working with policymakers to change the proposal. Rather than the large 50-percent increase all at once, the new legislation would simply get rid of the three-year “stepdown” on new cars. Most residents don’t know this, but when Michigan drivers purchase a brand new car they receive a 10-percent reduction in the value of that car every year for three years for purposes of determining the vehicle registration fee. Although we are still awaiting numbers from the Secretary of State, we believe this change could raise a substantial number of dollars over time.

Creating Reforms to our Transportation System

Throughout our meetings with legislators, many representatives and senators have told us that they want to see a series of transportation reforms. They want to be able to tell their constituents back home that they supported increased funding but also insisted on greater accountability and efficiency. We recently met individually with a number of House members to offer them a 3-page proposed list of reforms, many of which originated from the Mackinac Center report published earlier this year. We’ve asked legislators what kind of reforms they would need to see in order to support the funding increase.

As a result of these discussions, we’ve been meeting with House Transportation Committee Chairman Hopgood and he has now begun legislative hearings on reforms. Some policy ideas include requiring road agencies to submit asset management plans to the state’s asset management counsel to ensure the right road fix at the right time in the right place. Other suggested reforms include requiring road agencies to coordinate efforts with public works agencies so that sewer or other public utility work would be timed with road construction projects. A full list of reform ideas can be found on the DRIVE MI web site in the “facts and reports” section.

Where Do We Go From Here?

While we wait for the timing to improve on our overall funding package, we believe it is imperative that the reform pieces be ready to move forward. We are currently focusing on refining these policy ideas and thoroughly vetting them in the committee process. Although we would still like to see enhanced transportation funding as part of the overall budget agreement, we are more likely to see movement when legislators complete the budget process and come back in the fall.

Meanwhile, we ask that supporters and coalition members continue to make contact with legislators and continue to make the point that transportation funding is plummeting and our system is projected to deteriorate rapidly without a major overhaul of the state’s transportation funding system.

Please visit the DRIVE MI web site ( for more information and continued updates.

If you have any questions, please contact Mike Nystrom, Vice President of Government & Public Relations at or Keith Ledbetter, Director of Legislative Affairs at, or call the MITA office at (517) 347-8336.