Funding Initiative Heating Up
The Legislature returned from their two week spring break and moved full speed ahead on the transportation funding issue. Viewed as one of the top items to be debated (and hopefully solved while lawmakers are in session before summer recess), meetings between legislative leaders and the governor, as well as committee hearings introducing new legislation, all occurred in the first two weeks back. Optimism from policy makers leading the charge has been seen in media accounts and points to the legislature seriously debating options to raise additional funding for Michigan’s crumbling infrastructure system.
Representative Wayne Schmidt, Chair of the House Committee on Transportation and Infrastructure, introduced legislation that would exempt sales tax from motor fuel purchases. MITA has argued for several years that the biggest public policy problem that exists in how Michigan funds its transportation system is the sales tax that we place on gasoline and diesel fuel without dedicating a single penny of those revenues to funding our roads and bridges. Despite the fact that the majority of citizens in Michigan believe that every dollar collected in tax at the pump is going towards improving our system, nearly 85 percent of revenues collected goes towards education and local units of government. The remaining revenues go into the general fund of the state budget.
The idea of exempting sales tax from motor fuel, (which seems to be the idea gaining the most momentum within the legislature), is that lawmakers could increase the gas tax rate that generates revenues for our transportation system and raise the necessary $1.6 billion annually without increasing the overall tax liability at the pump much at all. If the legislature exempted motor fuel from sales tax and instead increased revenues to fund Michigan’s transportation system, the debate amongst legislative leaders would then be over how revenues could be raised to fill the hole left by losing the 6% sales tax on fuel, which is roughly $875 million dedicated to schools and locals.
The House Committee on Transportation and Infrastructure met this week to debate the sales tax portion and increasing the gas tax an additional 8 cents beyond what is currently collected with gas and sales tax. This would raise $1.4 to $1.5 billion more annually in road funding. Additionally, legislation introduced and debated in committee would place the gas tax rate on the wholesale level at a percentage-based rate to allow for increases as motor fuel prices increase. If the legislature would have done this in 1997, when the gas tax was last raised, we likely would not currently have a road funding dilemma. As gas prices have increased significantly over the past 15 years, our collection rates have remained at 19 cents per gallon.
In addition to committee hearings being held regarding this potential solution, there are numerous reports in the media that leadership in the House and Senate seem to be supportive of this concept. Both the Speaker of the House and the Senate Majority Floor Leader have phrased this as an opportunity to fix the way we structurally fund roads and bridges in Michigan and also education. They have both argued that funding education in Michigan through gas taxes isn’t a sound tax policy solution.
One item that has been discussed alongside the road funding debate is the repeal of the state’s prevailing wage. It is clear that in order to receive the necessary bi-partisan support that increased funding would require the repeal of prevailing wage would have to be taken off the table to garner any Democratic votes. Discussions continue to occur amongst labor groups, legislative leaders and the governor on the threat of prevailing wage being repealed.
New International Trade Crossing Receives Presidential Permit
The next stage in building the New International Trade Crossing (NITC) connecting Detroit and Windsor has been signed and obtained. Last week it was announced that President Obama had signed the necessary permit from the federal government to clear the way for building the NITC. Governor Snyder has indicated that actual construction could start in the next two years and that preliminary estimates of completion are estimated by 2020. The sign-off from the feds was the biggest regulatory hurdle the bridge had to clear. However, there could still be legal hurdles. Representative Fred Durhal of Detroit has filed a lawsuit to stop the bridge, and the Moroun family hasn’t hesitated to take the state to court in the past. Barring any setbacks from a legal perspective, the next steps, according to Snyder, will be acquiring property on the U.S. side, re-locating utilities and seeking a permit from the Coast Guard. Please continue to be on the lookout for any future updates and bulletins from MITA on the next steps. We continue to work with MDOT to obtain all relevant information on moving forward on the construction of the NITC, and we will be informing our members when appropriate.
Lansing Lobby Day is right around the corner: Have you submitted your RSVP yet?
MITA’s Lansing Lobby Day is less than a month away, and legislative calendars are filling up fast. If you have not already done so, please email Mariam Robinson, Outreach Coordinator, at mariamrobinson@mi-ita.com, or give her a call at (517) 853-5866 to sign up with your home address for the May 14 event. The goal of this year’s event is to physically show the legislature that the issue of transportation funding needs to be addressed now, before our roads and bridges fall into an even more dire state of disrepair. We need to remind our lawmakers that fixing the roads isn’t just about having a smooth ride from Dowagiac to Detroit or from Monroe to Marquette, but about keeping all Michigan citizens safe, saving money, helping businesses maintain their efficiency, and providing much-needed jobs to continue boosting our economy. The event is scheduled for Tuesday, May 14, and will kick off at 9:00 am in downtown Lansing. We hope to make this a memorable and effective day of lobbying for all those involved. Please consider joining us, and doing your part to help spread the message that we need to fix the roads now, not later and not next year.
If you have any questions or comments, please contact Lance Binoniemi at lancebinoniemi@mi-ita.com or call him at the MITA office at 517-347-8336.
