Last night, the House of Representatives passed a road funding plan that annually adds $1.85 billion more for roads and bridges, which is now headed to the Senate and expected to be passed by next Tuesday. The three main components comprise the $1.85B road funding bills the House passed last night. The “sales tax swap” at the pump, a marijuana tax, and redirection of $500M from the corporate income tax. In an effort to put more money into the local system without having to change the entire formula, the legislation establishes the neighborhood road fund, which directs money from the corporate income tax to that fund. You all made this outcome possible in a variety of ways. The rally certainly played a big part. The strength of the MITA PAC played a part. And the team of industry partners working in tandem played a huge role in the passage of the funding plan.
Late in 2024, efforts to pass a long-term funding solution failed during the lame duck session. At the time, incoming Speaker of the House Matt Hall proposed a $2.8 billion road funding solution. As Republicans took over the House at the beginning of the year, they continued to push for a road funding solution. In March, the House passed a proposal that added an additional $3.1 billion to the transportation budget. That money was raised by redistributing money from the state budget and putting it towards roads without raising taxes. Within a month, Governor Whitmer proposed a $3.1 billion roads plan that recommended raising additional funds through some non-traditional revenue sources, including digital advertising taxes, delivery fees on packages bought online, and changes to how we tax marijuana.
The Senate democrats, who are in the majority, remained relatively silent on the issue, telling stakeholders and the media that they were “working on a plan”. MITA continued to pressure the Senate to get them to the table to negotiate a road agreement. In June, the Senate passed a budget with a $3 billion placeholder for a road funding deal with zero details on how they would raise that revenue. These signs indicated that we were headed for a $3 billion annual road funding negotiation as we went into the budget negotiations. Governor Whitmer and Speaker Hall said they would not support a budget that didn’t include a road funding deal. As the budget is required to be passed by October 1, road funding also needs to be negotiated by that time frame.
The main sticking points between the House and the Senate have been how much new revenue from tax increases would be included and how much existing revenue from other areas of state government can be used for roads. As the deal began taking shape, a framework was established that there would be equal cuts to revenues. So, if they were going to raise $1 billion from new tax increases, they would also find $1 billion in cuts. At the end of the day, they were both only willing to do $400 / $500 million in each. Add in the revenue generated from the sales tax swap, and you land at $1.85 billion more annually for Michigan’s overall transportation network.
MITA staff is continuing to analyze the numbers to get a complete understanding of what passed and what it all means for funding. The big takeaways are we’ve solved a systemic problem at the pump we can now truly say that all taxes collected at the pump go to infrastructure. We have two new funding sources. And we have nearly 2B in additional funding annually that we can rely on going forward.
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.
