By David Eggert
Associated Press
LANSING, Mich. (AP) - A Republican-led Senate committee approved a $1.4 billion-plus road-funding plan Tuesday that would raise the state gasoline tax by 15 cents a gallon and trim the income tax if Michigan's general revenues rise above inflation in any given year.
The proposal also would redirect $700 million in general funds annually toward road and bridge infrastructure, though specific spending cuts were not outlined, and eliminate a tax credit for low-wage earners.
The full Senate could vote Wednesday after the Government Operations Committee passed the legislation 3-2 along party lines, with Democrats in opposition. GOP senators discussed the plan behind closed doors earlier Tuesday.
Voters in May resoundingly defeated a proposed sales tax hike that would have triggered more funding for roads, schools and municipalities.
"We heard the public. They want us to look within (existing revenues). They want us to fix the road problem, and they want us to control the size of government. We're going to try to do all of those things," Senate Majority Leader Arlan Meekhof, R-West Olive, said.
The Republican-led House passed a $1.2 billion plan in mid-June that would bring the 15-cents-a-gallon diesel tax in line with the 19-cent gas tax and increase both with inflation in the future, as well as earmark general funds for roads, cut economic development spending, increase registration fees for hybrid and electric vehicles and eliminate a tax credit for lower-income residents.
The Senate counterproposal would gradually align the diesel tax with the gas tax while boosting the gas tax by a nickel a year for three years starting in October, ultimately generating an estimated $822 million a year for roads, bridges and public transit, according to the Senate Fiscal Agency. It would provide for future inflationary adjustments after the fuel taxes reach 34 cents per gallon and boost hybrid/electric car fees.
Taxpayers would receive an income tax reduction each year equal to the amount that the $9.9 billion general fund grows by more than inflation.
"If it's there, then it's a rollback. If it's not there, it's not rollback," Meekhof said.
He said the spending reductions to help improve roads - $350 million in the 2016-17 fiscal year and $700 million in following years - would be determined through the yearly budget-writing process.
Democrats were skeptical of the proposal. Sen. Curtis Hertel Jr. of East Lansing said the GOP has shifted the tax burden from businesses to people in recent years, and the Senate plan "just makes it worse."
"Citizens end up paying more and getting less," he said. "We have unspecified cuts coming to the general fund. We all know where those cuts have to go. They usually come to education and health care. ... This idea that we're going to say, 'We'll make up the rest of it in cuts but we're not going to tell you what that is until later' should be disconcerting to people."
Two of the committee's three Republicans said they reluctantly voted to end the earned income tax credit, which the Michigan Catholic Conference and Michigan Association of United Ways testified is an important anti-poverty tool.
Published: Thu, Jul 02, 2015
