Tom Warne Report, 20 July 2012
Michigan – Roads in Michigan are going to get more gas pump revenue under a new law which is expected to increase road funding by nearly a half billion dollars. The change, signed by Gov. Rick Snyder, earmarks a portion of the state’s six percent sales tax charged on gasoline to pay for road projects. Previously, all of the 19 cent per gallon excise tax charged on gasoline went toward roads, while none of the sales tax did. Up until now, the general fund received four percent of the sales tax revenue, and the school aid fund got the other two percent.
Sen. John Proos, R-St. Joseph, who proposed the bill, said it will help address road funding concerns using resources already available, and without a tax hike. “My bill solves this problem for next fiscal year with funds already paid by consumers at the pump and investing them in our roads,” Proos said. A state analysis found that the switch could transfer up to $136 million per year to transportation from the general fund. The new law also means the state qualifies for matching federal funds. “With a federal matching rate of roughly four to one, it means about $400 million in road funding.”
Sales tax is an amazingly elastic revenue stream and the transportation industry won a major victory here: even a portion of the sales tax is a good thing. An argument could be made that all sales tax on fuel should go to transportation but this is an important first step. TW