A day after voters rejected a sales tax increase to free up $1 billion in revenue for roads, key House Republicans touted the need to find dollars to fix Michigan’s crumbling infrastructure within existing state funds.
During a morning press conference, House Speaker Kevin COTTER (R-Mt. Pleasant) told reporters that a “far majority” of any new road funding plan needs to focus on existing revenue.
“I would not be interested in plan that was all new revenue,” Cotter said. “I think you’ve heard where the public is at on that.”
On Tuesday, 80 percent of voters opposed Proposal 1, which evolved around a 1-percentage point sales tax increase to free up dollars for road and bridge improvements.
With that plan now on the cutting room floor, lawmakers, on both sides of the aisle, set out to find a new answer today for a problem that some estimate would cost $2 billion to fix — a problem that’s eluded Lansing for years.
If House Republicans truly want to find most of the dollars for road improvements within current revenues, they would have to take that money from somewhere. And they would have to do it at a time when the state’s budget is already tight.
On that note, Cotter emphasized the need to review $20 billion in restricted funds within the state’s budget.
“We have a lot of restricted revenue that could go to areas such as economic development,” Cotter explained. “And I would say that roads are economic development. Roads are a prerequisite to economic development.”
House Tax Policy Chair Jeff FARRINGTON (R-Utica) said he would like to see a “balanced approach” that brings in some new revenue and dedicates some additional existing revenue to roads.
“Keep it simple,” Farrington said. “Do it quickly. Do it with urgency. Let’s go forward.”
Farrington, who also serves on the House Transportation and Infrastructure Committee, suggested dedicating current sales tax revenue from fuel to roads and dedicating some other sales tax revenue to roads.
The state could also switch to a wholesale gas tax and increase the rate in the process and could increase registration fees, as well.
“We’ve got to drive new revenue not just look internally,” Farrington said. “We’ve got to do both.”
Likewise, Sen. Goeff HANSEN (R-Hart), chair of the Senate Appropriations Transportation Subcommittee, said he wasn’t sure the road problems could be fixed without increasing taxes.
“I know there’s some discussion about how we can find it in the budget, but not without cutting very deep in a lot of our other programs,” he said. “We can’t just use one-time money anymore – we have to find a complete solution for the long term.”
Cotter agreed that lawmakers should shoot for a long-term fix.
He introduced the “framework” of a plan he’s crafting and wants to unveil details for his caucus in the next days. Cotter said the plan would be introduced in bill form within the next few days, as well.
The plan was light on specifics but evolved around four areas: “tax fairness;” “using existing funding;” “making road funding a stronger priority going forward;” and “ensuring quality work.”
The “tax fairness” section of the plan mentioned that the “income tax code contains several subjective and arbitrary credits and exemptions,” according to a document handed out at the event.
“These special carve-outs often force the state to cut checks with taxpayer dollars to people who pay no taxes,” a document said. “We can do better.”
But Cotter declined to mention specific credits or exemptions he was considering changing.
“I think if I go any further with those, I’m going to let the cat out of the bag,” Cotter said. “But I would just go that far.”
Asked about that idea, multiple lawmakers said the Speaker is likely talking about the $9.3 billion in liability the state faces from outstanding Michigan Economic Growth Authority (MEGA) tax credits.
A plan that’s been floated by others is to increase the Michigan Business Tax (MBT), which only tax credit holders must still file under to maintain their credits. An increase in the MBT could drive the credit holders to give up their credits, freeing up money for the roads in the long-term.
But Gideon D’ASSANDRO, Cotter’s spokesperson, said the Speaker is not open to that idea.
“We passed bills to cap the MEGA problem in 2011 and then did so again to make sure they couldn’t be raised again last week,” D’Assandro said. “Now we’re giving the administration time to talk to the companies involved and negotiate a better solution for everyone.”
Meanwhile, today, Democratic lawmakers called on corporations to “pay their fair share.” Surrounded by most of his caucus at a press event this afternoon, House Minority Leader Tim GREIMEL (D-Auburn Hills) said the middle class has already sacrificed enough.
“It’s time for corporations and those at the top to contribute,” Greimel said.
Rep. Scott DIANDA (D-Calumet), a member of the House Transportation and Infrastructure Committee, said the state needs structural changes at the Michigan Department of Transportation.
Dianda also mentioned the need for shared services between the state and counties and for looking closely at transportation dollars that aren’t going directly to improving roads and bridges.
“If we’ve got to stay down here all summer, that’s fine,” Dianda said. “I hope we do. Put the golf clubs away. Cancel the vacation plans. We’re going to stay here. And let’s get it done.
And while Lansing works toward a long-term solution, Rep. Marilyn LANE (D-Fraser), the minority vice chair of the transportation committee, said lawmakers should take action soon to reduce weight limits on roads and to prevent insurance companies from raising rates because of accidents caused by potholes.
“If lawmakers don’t have the political courage or the wherewithal to fix our roads, then we should be protecting our consumers that have reasonable expectations that the roads would be safe to drive on,” Lane said.
Rep. Peter PETTALIA (R-Presque), the transportation chair, said he’s looking forward to working with Lane on crafting a plan.
For now, Pettalia said he’s not ruling out any possibility, including a tax increase.
As he put it, “Everything is open for discussion.”