LANSING, MI – Think it’s time to fix our roads? Governor Snyder and a bipartisan coalition of leaders in the Michigan Senate and House agree.
On Thursday, they announced a plan to fix Michigan’s roads that achieves five key principles:
1) Provides needed funding for roads and bridges
2) Protects schools, communities, public transit, and rail
3) Ensures transportation taxes go to transportation
4) Maintains competitive prices at the pump
5) Gives tax relief for lower-income Michiganders
What we pay today
Today, Michiganders pay an 18.7 cents per gallon gas tax that helps fund roads and a 6% sales tax on gas, about half of which goes to schools and local governments. At that level (which is one of the lowest among Great Lakes states), Michigan’s gas tax doesn’t provide enough funding to adequately maintain our roads. In fact, Michigan needs to spend at least $1.2 billion more per year to fix our roads.
What the plan does
The plan announced today will ensure that our roads have the $1.2 billion in additional funding needed. In short, it would:
- Repeal the sales tax on gas
- Replace it with a new motor fuels tax that is dedicated to funding transportation
- Increase the state sales tax so our schools and local governments have the funding they need
- Provide tax relief to lower-income Michiganders
What has to happen to make this work
For the plan to work, the legislature must approve it, and Michiganders will be asked to vote on a ballot proposal in May 2015 that will enact some of these changes, including increasing the state sales tax by 1% (from 6% to 7%), raising $1.34 billion in revenue, eliminating the sales tax on motor fuels, saving $752 million.
The legislature is being asked to pass a series of laws as well, including: a wholesale tax on motor fuels; vehicle registration changes; new transportation-related reforms, including measures on warranties and competitive bidding; and the restoration of the earned income tax credit (which will provide tax relief for low-income Michiganders). But those laws won’t take effect if the ballot proposal does not pass.
This plan will have the following results:
- $1.2 billion for roads and bridges
- $112 million for transit and rail
- $300 million for schools ($200 per pupil)
- $94 million for local governments
- $260 million in tax relief for lower-income Michiganders