Businesses implore lawmakers to take action on road funding

Governor has proposed raising per-gallon gas tax from 19 cents to 33 cents

By David Eggert
Associated Press

LANSING, Mich. (AP) — The business lobby implored lawmakers Monday to raise Michigan’s gasoline taxes and vehicle registration fees, despite Republican Gov. Rick Snyder’s $1.2 billion proposal initially receiving a cool reception in the Capitol.

“There is a cost to doing nothing,” said Matt Smego, legislative counsel for the Michigan Farm Bureau.

Groups representing the largest sectors of the state’s economy — agriculture, manufacturing and tourism — spoke out on what they deemed a road crisis during a news conference in Lansing.

In his budget proposal 2 1/2 weeks ago, Snyder proposed raising the per-gallon gas tax from 19 cents to 33 cents — the first increase in 15 years. The tax would begin fluctuating in a couple years depending on fuel consumption and construction costs. Yearly registration fees would rise 60 percent for cars and SUVs and 25 percent for big trucks and trailers.

Counties also could raise another $280 million for local projects with a registration fee, if approved by voters.

The plan is a non-starter for many in the GOP-led Legislature, though Snyder has said he is open to other ideas.

If nothing is done now, said Michigan Manufacturers Association lobbyist Mike Johnston, “we’re either going to pay for it in the cost of truck repair or delayed cost in terms of gas tax later. There will have to be a higher rate to deal with. Or we just have bad roads and people tend to locate elsewhere. Doing nothing is not an option.”

Because people are driving less and with more fuel-efficient vehicles, the state is receiving less revenue from per-gallon fuel taxes — a major source of transportation funding that is not keeping pace with construction costs. Another revenue stream, the 18.4-cents-a-gallon federal gas tax, has not gone up in 20 years.

Legislators averse to tax hikes have begun exploring other options, such as diverting money from elsewhere in the budget or searching for a mix of tax increases offset at least partially with tax decreases. Some say raising the 6 percent retail sales tax or expanding it to services — coupled with a reduction or elimination of fuel taxes or income taxes — could be an easier sell to residents.
But the business community supports funding roads and bridges with “user fees” paid by drivers.


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