Michigan House Passes Package That Would Hike Road Funding, Some Fees

AASHTO Journal, 12 June 2015

Lawmakers in Michigan’s Legislature continue to work on highway funding in this year’s session, as the Republican-led House of Representatives passed a package of bills that could pour hundreds of millions of dollars more each year into work on highways and bridges.

The package relies heavily on diversions of general funds into transportation, but includes a hike of 4 cents a gallon in the state diesel fuel excise fee to have it match the current 19-cent user charge for gasoline.

It would also index all motor fuels to inflation starting in 2016, with each 1-cent rise in fuel user fees from inflation expected to generate $50 million.

The package also includes new registration fees for electric vehicles and increase in registration fees on hybrid-fuel models, and would eliminate the state’s earned income tax credit for low-income workers.

That proposed EITC elimination drew fire from House Democrats, and news reports said most of the 12 bills in the package were approved largely along party lines. Reports also said the House package could be the start of a negotiation between legislative bodies to produce a final road funding plan.

If the package were to pass the Senate and be signed into law by the governor, it would generate an extra $555 million in the fiscal 2015-16 budget year that begins Oct. 1, according to a House fiscal summary. The extra transportation funding would rise to an estimated $1.16 billion when fully phased in during the 2018-19 budget year.

Of that nearly $1.2 billion in new road funding by 2019, $909 million would be diverted from the state’s general fund. Another $135 million would come from money now dedicated for economic development. The diversions would come largely by dedicating portions of state income and sales taxes to transportation.

The increased fuel and registration fees, plus fuel indexing, would bring in $119 million for the 2018-19 budget.

A statement from Rep. Aric Nesbitt, the majority floor leader, said: “The plan also eliminates some existing credits, redirects tobacco settlement and tribal gaming revenue, and enacts project bidding requirements to ensure that construction projects deliver the best quality at the lowest cost to taxpayers and include warranties.”

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