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House GOP Sends Its Own $1.2B Road Plan To Senate

October 28, 2015

With negotiations on a bicameral, bipartisan road-funding plan essentially stalled, House Republicans took the wheel tonight, approving their own $1.2-billion transportation proposal.

House GOP leadership crafted the plan, which would result in $1.2 billion in additional funding for roads by Fiscal Year 2021, and gathered the votes for it Wednesday — less than a week after negotiations with Senate leadership, Democratic leaders and Gov. Rick SNYDER hit an impasse at the Capitol.

The crux of the new House plan is shifting $600 million in existing state dollars to roads, increasing vehicle registration fees to create $400 million and increasing the gas tax to create $200 million. The plan would also provide tax relief in the form of a potential income tax cut and an expansion of the Homestead Property Tax Credit.

Snyder and Senate Majority Leader Arlan MEEKHOF (R-West Olive) have been pushing for a much different plan focused on $800 million in new revenue and only $400 million in existing revenue.

But Cotter said Wednesday evening that votes aren’t there in his caucus for that type of solution.

“This is a huge step forward,” Cotter said after the House votes. “I believe this is a good grand compromise plan.”

The bills to increase the gas tax and hike registration fees — two of the nine total bills — passed narrowly.

The main gas tax increase bill,  HB 4738, which would increase the gas tax by about 3.3 cents per gallon, passed 56-50. The registration fee increase bill,  HB 4736, which would generally increase registration fees by about 40 percent, passed 55-51.

Only one Democrat crossed over to vote for the two bills. That person was Rep. Harvey SANTANA (D-Detroit), who doesn’t caucus with the Democrats.

The votes came a day after Meekhof called on the House to vote on a much different plan that was being negotiated by legislative leaders (See “Meekhof Calls On House To Vote On ‘Last, Best’ Road Deal,” 10/20/15).

Asked if he would challenge Meekhof to hold votes on the new House GOP plan, which now moves to the Senate, Cotter declined to go there.

“I’m not going to return a challenge with a challenge,” Cotter said. “But we’ve produced a great plan. And I believe this is a plan worthy of their consideration. My hope is that this plan is ultimately signed by the Governor.”

In a statement, Meekhof said he was happy the House sent a plan over for the Senate to consider. Earlier this year, the House sent a plan to the Senate, and the Senate went in a much different direction (See “Senate Squeaks Out Road Plan With Calley’s Help,” 7/1/15).

“I look forward to talking with the Governor and legislative leaders about the proposal,” Meekhof said of the new plan. “I have not had an opportunity to review the legislation, yet. The next step is for my fellow caucus members and I to review the details.”

Sara WURFEL, spokesperson for Snyder, said generally “forward progress is a good thing, though the Governor does have some concerns.

“We have to make sure that any solution is fiscally responsible and viable, and doesn’t inadvertently jeopardize our state’s comeback,” Wurfel added.

In addition to the tax increases, the new House plan would also increase the Homestead Property Tax Credit to provide $200 million in tax relief. That would balance out the 3.3-cent-per-gallon gas tax increase in terms of state revenue impact.

Rep. Jeff FARRINGTON (R-Utica) called supporting the nine-bill package a vote for “investing in our future.”

“Today we vote for tax relief for seniors and families,” Farrington added in a floor speech. “Today we vote to end political gamesmanship and excuse-making that’s been so prevalent over the last few years . . . instead, we are choosing to govern.”

But Democrats slammed the plan as a “shell game” because of the amount of existing state revenue it relies on in future years and as a “mini Proposal 1” because of its broad nature.

House Minority Leader Tim GREIMEL (D-Auburn Hills) called the plan an “embarrassment” and repeatedly alleged that its reliance on the General Fund jeopardizes funding for schools and public safety.

“All the while our roads will continue to get worse and worse,” Greimel said, noting the plan doesn’t reach $1.2 billion until Fiscal Year 2021.

“I would hope that the Senate and the Governor would reject this embarrassing charade,” he added.

Rep. Sam SINGH (D-East Lansing) said House Republicans were simply trying to “stick it” to the Senate. The House is hoping Meekhof, who has pursued a road plan with $800 million in new revenue, “blinks,” Singh alleged.

“And then if he blinks, the Governor blinks,” Singh said of House Republicans’ hopes.

The new House plan would move the household income phase-out range for claiming the Homestead Property Tax Credit from $41,000-$50,000 to $51,000-$60,000. In addition, the maximum credit that can be claimed would go from $1,200 to $1,500 in tax year 2018.

The House plan also includes the Senate bill to potentially rollback the income tax if state revenues hit certain marks above inflation in the future.

Under the bill, the income tax rate, currently 4.25 percent, could decrease in future years when General Fund revenue growth exceeds the rate of inflation.

According to the House Fiscal Agency, if that language would have been in place in past years, the income rate for 2016 would drop to 3.92 percent, resulting in a revenue reduction of almost $680 million.

The vehicle registration fee hikes — an average of $55 across commercial and passenger vehicles — would begin in Fiscal Year 2017. Rates for passenger vehicles, light trucks and commercial trucks would all increase by about 40 percent across the board.

For passenger vehicles, the bill would increase the average registration tax by about $40, effective Oct. 1, 2016.

The 3.3-cent-per-gallon gas tax increase would take affect in Fiscal Year 2019 with diesel parity — increasing the diesel tax from 15 cents per gallon to the same rate as the current gas tax of 19 cents per gallon — would take effect in Fiscal Year 2018.

The shift of dollars from the General Fund to roads would begin in Fiscal Year 2019 with $150 million. Then, in Fiscal Year 2020, that amount would increase to $325 million. And in Fiscal year 2021, the amount would go to $600 million.

Overall, the plan would create $400 million in additional funding for roads in Fiscal Year 2017, $440 million in Fiscal Year 2018, $750 million in Fiscal Year 2019, $950 million in Fiscal Year 2020 and $1.2 billion in Fiscal Year 2021.

The registration fee increase bill, HB 4736, passed with seven Republican no votes. They were Reps. Gary GLENN (R-Midland), Ken GOIKE (R-Ray Twp.), Tom HOOKER (R-Byron Center), Jim RUNESTAD (R-White Lake), Pat SOMERVILLE (R-New Boston), Lana THEIS (R-Brighton) and Henry VAUPEL (R- Fowlerville).

The gas tax increase bill, HB 4738, passed with six Republican no votes. They were Reps. Ray Franz (R-Onekama), Hooker, Lucido Runestad, Theis and Somerville.

SB 0414, the income tax “trigger” bill, passed in a party line vote, 61-45. Rep. Gretchen Driskell (D-Saline) was absent.

HB 4370, the Homestead Property Tax Credit bill, which would also earmark General Fund revenue to roads in the future, passed 62-44 with Santana joining Republicans in support.

HB 4737, on road construction warranties, passed 101-5.

HB 4614, which goes along with the main gas tax bill, passed 56-50.

The House also approved bills on requests for proposals for road construction projects, HB 4610 and HB 4611.

Just before the votes Wednesday, the Detroit Regional Chamber asked lawmakers to take action on a road plan that was $800 million new revenue and $400 existing revenue.

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