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Senate Squeaks Out Road Plan With Calley’s Help

July 14, 2015

July 1 the Senate voted out its long-awaited road-funding plan that supporters hope will ultimately raise $1.4 billion for roads, but it wouldn’t have been possible without the tiebreaking vote of Lt. Gov. Brian CALLEY.

The plan generates roughly half of the proposed increase in revenue from a higher gas tax and half of the money from unspecified General Fund budget cuts. It also calls for a rollback of the state’s income tax tied to the growth of the state’s General Fund.

Eight bills associated with road funding – SB 0414, HB 4610, HB 4611, HB 4612, HB 4613, HB 4614, HB 4615 and HB 4616 — were passed through the Senate, but two of the main pieces of legislation were only moved after Calley broke the tie in favor of a tax hike. 

A substitute to HB 4615, the bill that increases the gas tax, was the first of the roads package to come up and stagnated in a 19-19 vote before Calley’s final approval.  HB 4616, basically an implementation bill to ensure diesel taxes are ultimately taxed at 34 cents as well, was voted out in a similar fashion.  

The votes came after several hours of caucusing and general recess, during which Senate Majority Leader Arlan Meekhof (R-West Olive) took time to speak individually to many of the senators who voted in opposition. 

Meekhof later told reporters that despite ups and downs associated with securing votes on the Senate floor and the hair-thin margin on voting in a gas tax hike, he was confident the plan was a responsible step forward. 

“This is another step in the process that helps us get to a sustainable road funding solution,” he said.

Voting against the bills were Republican Sens. Jack BRANDENBURG (R-Harrison Twp.), Patrick COLBECK (R-Canton), Mike GREEN (R-Mayville), Dave HILDENBRAND (R-Lowell), Joe HUNE (R-Hamburg), Phil PAVLOV (R-St. Clair), John PROOS (R-St. Joseph), David ROBERTSON (R-Grand Blanc) and Tory ROCCA (R-Sterling Heights). 

The only member of the Senate Democratic caucus to vote in favor of the legislation was Sen. Virgil SMITH, Jr., (D-Detroit), whose position in the Senate is on thin ice, pending three felony charges against him. 

“He’s a principled man and he knows what he wants,” Meekhof said when asked whether any assurances had been made to get his necessary vote on the roads deal. 

The Government Operations Committee moved legislation that raised the gas tax 5 cents in three installments over the next 18 months. 

Under the substitute to HB 4615, the gas tax would go up 19 cents to 23 cents on Oct. 1, 2015; to 27 cents on Jan. 1, 2016, and 34 cents on Jan. 1, 2017, raising $475 million more for the roads in Fiscal Year (FY) 2016, $733 million in FY 2017 and $822.1 million in FY 2018, according the Senate Fiscal Agency (SFA).   

The substitute also creates a lock box directing seven cents of the 15-cent gas tax increase to a fund controlled by the Department of Treasury that could only be spent on projects approved by joint resolutions of the House and Senate. 

HB 4609, a bill eliminating the earned income tax credit (EITC), was not taken up during third reading, despite having moved out of committee. 

Meekhof said that bill wasn’t moved because some members of his caucus still had “heartburn” over the idea of cutting the EITC entirely, but reserved the right to take it up again later should the caucus support it. 

“It’s something that we are going to consider in the future, just not today,” Meekhof said. 

Tom HICKSON of the Michigan Catholic Conference, whose organization is strongly against removing the EITC, later thanked the Senate in a statement for not including it with the rest of the roads package. 

“Michigan Catholic Conference is appreciative of the Senate for recognizing low-income workers and preserving this tax credit that helps to afford basic necessities and gives workers a hand up,” Hickson said. 

Although Senate Majority Leader Jim ANANICH (D-Flint) was similarly glad to see the EITC wasn’t cut down today, that didn’t make him any more supportive of what he considers an irresponsible roads proposal. 

Ananich said he’d hoped to see a bipartisan solution crafted from the Senate that did not strike at Michigan’s poorest residents. That goal was not reflected in the legislation the Senate voted on today, he said, noting that most of the $700 million in proposed cuts will likely hit programs assisting those in severe poverty.  

“What we have here is a recipe for disaster — one I cannot and will not support,” Ananich said on the floor.  

He later elaborated: “You can’t break the rest of the system to pave the roads. I think that’s the wrong way to go.” 

Under the plan, a $350 million General Fund allocation would be made toward roads in Fiscal Year (FY) 2017 and a $700 million special roads allocation that would take place going forward until FY 2033.   

The plan includes a mechanism that would roll down the state’s income tax. It charges the principals of the January Consensus Revenue Estimating Conference (CREC) — the state Treasurer and directors of House and Senate Fiscal Agencies — to determine if the growth in the state’s General Fund was greater than the rate of inflation.  

If so, the state Treasurer would need to work the numbers through a complicated formula that works out to be a ratcheting down of .1 percent from the state’s 4.25 percent income tax for every $230 million the state’s General Fund is earning over the rate of inflation.   

The Senate Government Operations Committee voted the initial draft of the plan out of committee Tuesday. 

Prior to the votes, Dick POSTHUMUS, senior adviser to Gov. Rick SNYDER, told reporters the administration has concerns with cutting $700 million out of the budget.  

However, he said the Senate plan is “a great step forward, and there’s a lot of good things in it.”

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