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Snyder says he’s ‘ready’ to sign $1.2B road plan into law

November 10, 2015

Holding up a pen during a press conference Tuesday night, Gov. Rick SNYDER announced that he’s “ready” to sign the Legislature’s $1.2 billion road funding plan into law.

The plan, which would increase the gasoline tax, bump up registration fees and eventually shift $600 million in existing state revenues to roads, narrowly passed the House and the Senate Tuesday. 

“This will lead to safer and better roads in our state and do it in a fiscally responsible way,” Snyder said of the proposal. 

According to the Governor, the plan marks the largest transportation investment in the state of Michigan in 50 years. And it will bring the first increase in registration fees in more than 30 years. 

It comes after voters soundly rejected a proposal to increase the sales tax for roads in May and after years of lawmakers struggling to find more than a $1 billion in added revenue for the state’s crumbling infrastructure. 

After the House voted Tuesday, Appropriations Chair Al PSCHOLKA (R-Stevensville) said it was past time for action. 

“This is probably the biggest thing we’ve done on infrastructure in maybe the last few decades,” Pscholka said. 

The final plan marks a compromise among House Republicans, Senate Republicans and Snyder’s administration. 

It includes $600 million in new revenue and $600 million in existing revenues, as pushed by the House. And it includes a heavier reliance on the gasoline tax than registration fees, as pushed by the Senate. 

The plan will increase the gas tax by 7.3 cents per gallon effective Jan. 1, 2017. The new gas tax rate will be 26.3 cents per gallon, and the current diesel tax of 15 cents per gallon will be increased to match the gas tax rate, as well. 

Plus, the gas tax will eventually be tied to inflation. The gas tax changes will bring in an additional $400 million. 

Registration fees will increase by about 20 percent across the board, bringing in another $200 million. The registration changes will take effect Jan. 1, 2017. 

The plan will be completely phased in by Fiscal Year 2021. At that point, the plan will have the full $1.2 billion impact. 

Democrats slammed the plan because of its reliance on General Fund revenues and the fact that it won’t be completely phased until five years from now. 

They point out that some estimates say the state needs another $2 billion for roads now. 

Senate Minority Leader Jim ANANICH (D-Flint) said the plan is too little, too late in terms of new revenue and also puts several key aspects of the budget in danger, he argued. 

“$1.2 billion is what we needed a few years ago, and three to four years from now when it’s finally fully implemented, it will not be nearly enough,” Ananich said. “And to have $600 million unidentified? It’s just not responsible.” 

House Minority Leader Tim GREIMEL (D-Auburn Hills) called the plan a “sham” and a “joke.” 

“The majority party today is saying it’s OK to kick the fiscal can down the road for future generations,” Greimel said. 

During a speech on the House floor, Greimel also argued that Snyder himself had previously indicated that he wanted no more than $400 million of existing state revenues in future years to be part of the road plan. 

Asked about that Tuesday night, Snyder said he wanted a plan that was “fiscally responsible.” 

Snyder said with Treasury and the state fiscal agencies’ help, leaders examined what they could ask the General Fund to contribute while still making other investments in other areas. 

“If you look at how this gets phased in, it’s phased in in a fashion where that works,” Snyder said. 

The Business Leaders for Michigan had also voiced concerns about state’s finances when it’s come to past transportation proposal. Doug ROTHWELL, president and CEO of the organization, said the final plan “doesn’t meet all of our objectives” but “meets many of them.” 

“Moving forward, we will monitor the state’s finances to ensure the goals of this multi-year funding plan are met and continue to encourage the state to prioritize investments to make college more affordable and to support job training and economic development as these are also critical priorities that are important to growing jobs and our economy,” Rothwell said in the statement. 

The Detroit Regional Chamber said today’s plan appeared to be “the best this Legislature can do.” But the Michigan League for Public Policy said the plan would put funding for schools, public safety and local communities in jeopardy. 

Today’s votes came two weeks after the House sent a plan that featured $400 million from registration fees and $200 million from the gas tax to the Senate. 

Senators flipped those numbers and made a number of other changes to gather the votes to send the seven-bill package back to the House today. 

HB 4738, the bill that would increase the gas tax by 7.3 cents per gallon, passed the House, 55-52. Rep. Harvey SANTANA (D-Detroit) was the only Democrat to vote for the bill while seven Republicans voted no. The House Republicans in opposition were Reps. Gary GLENN (R-Midland), Tom HOOKER (R-Byron Center), Peter LUCIDO (R-Shelby Twp.), Jim RUNESTAD (R-White Lake), Pat SOMERVILLE (R-New Boston), Lana THEIS (R-Brighton) and Hank VAUPEL (R-Fowlerville). 

The bill passed the Senate, 20-18. Sen. Virgil SMITH Jr. (D-Detroit) was the only Senate Democrat to vote for the bill. 

Republicans to vote no on HB 4738 were Sens. Jack BRANDENBURG (R-Harrison Twp.), Patrick COLBECK (R-Canton), Mike GREEN (R-Mayville), Joe HUNE (R-Hamburg), Phil PAVLOV (R-St. Clair), JohnPROOS (R-St. Joseph), Tory ROCCA (R-Sterling Heights) and Tonya SCHUITMAKER (R-Lawton). 

HB 4736, the bill that would increase registration fees by about 20 percent across the board, passed the House, 54-53. It passed the Senate 20-18. 

Under the bill, the average registration tax in Michigan would go up by about $20. The increase would take Jan. 1, 2017. It would also create a new surcharge for electric vehicles. 

The vote break down in the House was the same as that on HB 4738 except Rep. Ken GOIKE (R-Ray Twp.) joined the opposition. In the Senate, Sen. Judy EMMONS (R-Sheridan) voted no while Green voted yes. 

The General Fund shifts are located in HB 4370. The bill would also expand the Homestead Property Tax Credit to produce $200 million in tax relief, essentially balancing out the tax increase in the registration bill. 

HB 4370, which would phase in the fund shifts from Fiscal Year 2019 to Fiscal Year 2021, passed the House 62-45. It passed the Senate 28-10. 

On top of the Homestead Property Tax Credit, the package could also bring another form of tax relief. 

The new version of SB 0414 would allow the state to drop the 4.25 percent income tax rate if General Fund revenues increase above the rate of inflation times 1.425. It passed the House, 61-46, and the Senate, 28-10. 

The income tax determination would begin with tax year 2023. 

HB 4737 would form an Road Innovation Task Force to report on ways to the Michigan Department of Transportation could build high quality roads that last longer than those typically constructed by the state. The bill would also create an innovation fund that would receive money that couldn’t be used unless approved by the Legislature. It passed the House, 73-34, and the Senate, 27-11. 

HB 4614, which goes along with the main gas tax bill, passed the House, 55-52, and the Senate, 21-17. 

HB 4616, which contains alternative fuel language, passed the House, 56-51, and the Senate, 20-18.

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