Yesterday the Senate passed a package of transportation funding bills with my vote in support. While many in the Legislature, myself included, firmly believe that a redirected sales tax is a better way to ensure more money goes toward roads, today the Michigan Senate voted to increase the gas tax as a necessary plan B.
The package of bills increases our gas tax over time, phasing it in to reach an eventual increase of 15 cents. This new revenue, along with a permanent rededication of $700 million in existing revenue, will generate more than $1.5 billion a year in new transportation revenue. Importantly, however, the package also includes mechanisms to lower the state income tax at the same time. This reprioritization of spending was a required first step before we were willing to consider increasing the gas tax.
It was equally necessary that we ensured parity with non-gasoline-fueled vehicles. Some fuels are currently taxed less, while others are not taxed for roads at all. As a result, the package also includes a diesel tax parity measure, so that the amount of fuel taxes for diesel will be the same paid for regular gasoline.
Other fuels, such as compressed natural gas (CNG) that trucking companies are now starting to use instead of diesel, will be taxed in Michigan for the first time. Electric vehicles, which currently avoid paying the state gas tax and the federal gas tax and pay lower sales tax on fuel, will also now pay a fee in lieu of avoided taxes through registration fees. Certain hybrid electrics with larger batteries will be included, but at a discounted amount, and non-plugin hybrids will not be affected.
When taken together, a fuel tax for roads of some kind will now apply to all vehicles, regardless of the fuel they use. It was important that the gas tax not be increased by even a penny until all drivers were paying fuel taxes toward roads.
Road warranty bills are also included, as is a new dedicated road fund that will be used by the Michigan Department of Transportation (MDOT) exclusively for building longer-lasting roads. With MDOT’s current limited resources, they were frequently forced to make decisions that saved money in the short run but were more costly over time. The package passed today ensures Michigan will be put on a path in which new money is used for roads that may be expensive to start construction on, but will save taxpayers money in the long run.
This change in how Michigan does roads, along with the income tax decrease, persuaded several legislators to vote yes even though there remained a preference to fund roads through the sales tax. But because of constitutional restrictions on how sales tax money can be used, the Legislature can’t make such a sales tax change on its own, and after the failure of Proposal 1, going back to the voters again was not viewed as a viable option.
Michigan’s roads will not be fixed until we make road funding a priority. We have never historically done that in Michigan, which led to the crumbling infrastructure we have today. If signed into law by the governor, this package of bills will increase road funding in a meaningful way, drive down our expenses by using longer-lasting construction methods, and provide a way to decrease the income tax significantly over time.
Serving with and for you,