MITA Protects $2.5 Million of Road Dollars from Being Diverted in Alternative Fuels Plan
Legislation designed to promote greater alternative fuel use recently passed the House of Representatives.
The legislation offers up to $2.5 million in tax reductions for anyone purchasing E85 (ethanol) fuel or bio-diesel. Bill sponsors believe a 7-cent/gallon reduction on the regular fuel tax for the E85 fuel and a 3-cent/gallon reduction on bio-diesel was necessary to motivate the driving public to buy these new hybrid fuels.
MITA was concerned that this diversion of dollars away from road funding would only accelerate shortfalls for years to come, especially with the expected proliferation of alternative fuels.
MITA staff was successful in adding a provision that required any lost revenue from the tax break to be made up from the state’s general fund.
The bills now head to the Michigan Senate for consideration.
Additional Road Money for ’06 Under Consideration
A supplemental transportation budget for 2006 is set to be voted on soon in the State House.
Congress had passed the new federal transportation appropriations law (SAFETEA-LU) after this year’s state transportation budget had already been approved, thus providing additional funds for our state. The supplemental budget bill will incorporate those increases, as well as $21 million that Governor Granholm had line-item vetoed from the last budget.
The House and Senate are currently negotiating with the Governor on certain projects they would like completed as part of an overall transportation spending deal.
Also, the Governor’s Local Jobs Today Initiative, which would redirect $80 million in state funds to local road agencies in the form of grants and thus help to secure some $320 million in federal earmarks, may be held up due to partisan politics in Lansing. There is a concern that this legislation, which would be helpful to both local government and the industry, may get mixed into a political fight that ultimately includes the 2006 supplemental bill (referenced above) and the 2007 Transportation Budget bill.
Legislature Working to Amend School Criminal Background Check Requirements
Legislation moving through the House and Senate would no longer require workers to undergo fingerprinting and background checks on school construction projects.
The Student Safety Initiative was initially designed to protect children from criminals and sexual predators who were in direct contact with the students. An unintended consequence of the new law was that it applied to any type of commercial vendor who worked on school grounds, including construction workers.
The House and Senate have passed similar versions (HB 5675) to fix the law. The goal is to have final approval before the Legislature begins spring break the first week of April.
House Votes to Eliminate Single Business Tax (SBT) by End of 2007
The state Legislature is set to give final legislative approval to eliminate the state’s main business tax, the Single Business Tax (SBT), by the end of 2007.
Supporters of the legislation (HB 5743) say this move is critical to creating jobs and turning Michigan’s economy around. They point to a 2006 Tax Foundation study that ranks the state’s business tax burden as the second highest in the nation.
Critics, including Governor Granholm, contend that the tax should not be eliminated until a replacement has been found. They also insist that any SBT rate reduction should be offset by the same increase in other business taxes.
The governor is expected to veto the bill.
To further complicate matters, Oakland County Executive L. Brooks Patterson has begun a petition drive to eliminate the tax. If enough signatures are collected by May 31st, the Legislature can approve the measure without risk of a veto by the Governor.
State Funding Initiative Kicks into High Gear
The campaign to make elected officials and the general public aware of Michigan’s road funding crisis is off to a quick start, thanks to over $1.7 million in contribution commitments.
In addition to having over $800,000 already in the bank, we are in the process of creating two promotional pieces and have almost completed the campaign Web site. You will soon be able to review the site at www.drivemi.org.
MITA has hired a top-notch team of consultants and has also been communicating with the Mackinac Center, a conservative think tank based in Midland, about creating a road report. The conservative anti-tax organization has historically recognized that investing in roads and infrastructure is critical to Michigan’s economic success. A favorable report from the Mackinac Center would help to boost the chances of a Republican-controlled Legislature finally providing the adequate road funding that the state so desperately needs.
MITA will keep you updated on all of these important issues. If you have any questions please contact Mike Nystrom, Vice President of Government and Public Relations at mikenystrom@mi-ita.com or Keith Ledbetter, Director of Legislative Affairs at keithledbetter@mi-ita.com or by calling the MITA office at (517) 347-8336.
