The 45-cent-a-gallon gasoline tax hike that Gov. Gretchen Whitmer proposed last week isn’t going to happen.
Some gas tax increase? More than likely, yes. It’s just not going to be 45 cents the Democratic governor wants.
“The proposal that she put forward is a non-starter for my caucus because the people in our districts cannot afford it,” said Republican House Speaker Lee Chatfield.
The idea of raising $2.5 billion to fix Michigan’s roads is a different story. Senate Majority Leader Mike Shirkey, also a Republican, said last week, “This $2.5-2.6 number has now survived two administrations, so I think we can safely conclude that is a consensus we can rally around.”
Shirkey and Whitmer may quibble over whether that’s $2.5 billion on top of the Legislature’s $1.2 billion funding plan for 2015 or including the $1.2 billion plan. Regardless, some taxes will be increased. More road funding revenue will be generated.
So, if not a 45-cent-a-gallon gas increase, then what? That’s the question.
Increasing the state’s income tax to 5.3 percent, from 4.25 percent, would get the $2.5 billion.
Republicans don’t like that idea. Raising the state’s corporate income tax to 19.5 percent also gets $2.5 billion, but the R’s like that idea even less. The sales tax could go up 7.4 percent from 6 percent. That was tried at the 2015 ballot box and defeated.
Why do we need to raise taxes? Have you driven on our Michigan roads?
Outside of the many, many stories of folks’ excellent adventures on the Michigan roads, there are professional projections.
The Department of Transportation reported that raising no new additional revenue will mean 42 percent of Michigan roads will be in good or fair condition by 2029. We’re at 78 percent in good or fair condition, if you can believe that.
The national transportation group TRIP reported Tuesday that the average Michigan driver spends $646 per year on car repairs, which is up from $562 in previous reports.
According to the Tax Foundation, Michigan’s 26.3-cent gasoline tax and the corresponding sales tax puts our total state tax on gasoline at 44 cents, the nation’s sixth highest. Michigan needs to raise the gas tax only 15 cents a gallon to top Pennsylvania for the nation’s highest rate.
Chatfield is trying to avoid the distinction. He’d like to get rid of the sales tax on gasoline — which raises about $1.1 billion a year, $800 million of it going to the schools — and replace it with a higher gas tax to raise more road revenue.
For now, the plan is stalling out right about the time you look at how to replace the $800 million in K-12 education money, which Whitmer would need. One idea is stop funding community colleges and universities out of the School Aid Fund, but then how do you fund those two expenses?
Whitmer won’t sign anything that cuts education. Increasing the sales tax needs voter support. Chatfield sponsored the bill to cut the income tax last session, not increase it.
So once again, where does the revenue come from?
Shirkey really would like to see no-fault auto insurance reforms passed before tackling the budget. His wants to tell ratepayers that real relief is on the way before asking residents to reach into their pockets for more state investment.
Government doesn’t see much savings from lower car insurance rates, but real people do. And if the Senate leader can deliver cost-saving reforms to taxpayers, he’s more comfortable asking those who use the roads to pay more for them.
The Mackinac Center reported commercial trucks pay about 10 cents per mile to use the roads — but produce about 60 cents per mile in damage. Passenger cars pay about 3 cents per mile to use the roads while essentially doing no damage.
Still, Senate Appropriations Committee Chairman Jim Stamas said Friday he’s not keen on having truckers paying a higher tax than passenger cars.
Shirkey has talked vaguely about a fee that’s based on how many miles a driver puts on his or her car. In concept, the idea makes sense … until you get to the question about how this information is verified?
Asking Michiganders to put any type of tracking device on their vehicles to record miles isn’t going to fly.
It gets back to the original $2.5 billion question. If not the 45-cent-per-gallon tax, then what?
(Kyle Melinn of the Capitol news service MIRS is at email@example.com.)