Michigan House GOP wants sales tax at pump to go to roads

Posted at 10:22 AM, Jun 07, 2019

House Republicans on Thursday unveiled a budget plan that would dedicate Michigan's 6% sales tax on motor fuel to road construction, which they said could avoid a 45-cents-a-gallon gasoline and diesel tax increase proposed by Democratic Gov. Gretchen Whitmer.

The bill, which won initial party-line approval from a subcommittee, was opposed by Democrats who said it would not raise nearly enough to fix the roads and would hurt schools and municipalities that now get much of the sales tax revenue assessed at the pump.

"We are in a road crisis, and we're doing our best as a Republican caucus to avoid another gas tax increase. Michigan families can't afford an average of $1,800 additional taxes per year," said Rep. Matt Maddock of Milford, who chairs the House transportation appropriations subcommittee. Another Republican on the panel said guaranteeing that sales taxes at the pump only go toward funding roads would "clear the mud" for the public and be a "logical step."

The fund shift would be phased in over two fiscal years, with two-thirds of the sales tax going to roads in the next budget and all of it in future years. It would generate $542 million initially and $830 million in 2020-21, which is less than half of the roughly $2 billion Whitmer says would be required to improve what she has called the country's worst road conditions.

Democrats questioned Republicans' pledges that schools and local governments would not be affected by the change, saying there would be cuts to spending on other priorities such as public transit and no guarantee against long-term effects on education and revenue-sharing.

Rep. Leslie Love, of Detroit, said drivers are more receptive to a tax increase than lawmakers expect because they are tired of paying hundreds of dollars more a year to repair vehicles damaged by potholes.

"It's just money tossed away that never fixes the real issues," she said.

Michigan is among a small number of states that apply the sales tax to motor fuel — a factor in why the state's gas taxes were sixth-highest in the U.S. as last year.

Thursday's move was another step in what could be a lengthy budget process that extends into the summer due to the clash over taxes. Whitmer said of the House budget proposals: "We're in like the fourth inning. That's all I'll say about that."

GOP-led House subcommittees also approved school and higher education budgets that would spend less than what was proposed by Whitmer, who wants to generate $2.5 billion in new fuel taxes and also free up money for education by stopping financial "shell games" that have been used to patch potholes.

The budget for K-12 schools and early childhood education would be $15 billion, a 1.4% increase, but roughly $323 million under Whitmer's plan. The House plan, like one approved by the GOP-controlled Senate, would not include her call for moving to a "weighted" funding formula to account for extra costs to educate special education, at-risk, and career and technical spending students — though the subcommittee chairman, Republican Rep. Aaron Miller of Sturgis, credited Whitmer for the proposal and expressed openness "in concept."

Base per-pupil funding would rise by between $90 and $180 under the House bill. Whitmer wants a $120-$180 increase.

Under a higher education bill that was advanced Thursday, public universities' funding would go up by less than 1%. Whitmer had called for a 3% increase.