Our office is pleased to announce that the legislature passed a road funding package yesterday that is on its way to the Governor for his signature. The bills are phased in over time but ultimately will provide $1.2 billion to repair, maintain and improve the state’s crumbling transportation system, while also instilling reforms to ensure that the money will be used in an effective manner.
The past several months have seen many calls, letters, and e-mails to our office regarding the issue of road funding, and we fully appreciate the wide variety of opinions. To try to address the problem we first looked to see if the issue of roads being underfunded was real, and concluded that it was. From that perspective we believed that inaction (leaving us with the status quo) was not an option, no matter how difficult it would be to find a plan that all parties and branches of government could agree to.
Next was trying to determine how much of a road funding shortfall could be "fixed" by reallocating existing funds. Ultimately it was determined that the support of all parties only existed if $600 million would come from current budgets and the other $600 million would come from new revenue.
How that new revenue would be collected was then hotly debated, and while some wanted to increase our sales tax, others wanted to increase the gas tax, and others wanted to increase registration fees, in the end we chose to spread the increases out among both the gas tax and registration fees. From a personal standpoint our office had a preference for increasing the sales tax, but held the minority opinion, especially after the defeat of proposal 1. Our office did not want to be an obstructionist and compromised with the other parties in exchange for other taxpayer protections.
Revenue increases will be phased in over time, but ultimately the gas tax will be increased by roughly 7 cents a gallon and there will be 20% increases in passenger vehicle registration fees. It is estimated that the average motorist will pay about $60 more a year once all factors are taken into account.
The plan would also provide fairness and equity with the way taxes are calculated for diesel fuel and electric vehicles, so that everyone is paying an equitable share. Other changes were made to the law to require stricter road warranties and to place an emphasis on longer-lasting roads that may cost more initially but will save taxpayer money in the long run.
Lastly, the legislation will make other reforms to the state’s tax system, including changes that will improve Michigan’s Homestead Property Credit in a manner that will allow more homeowners and renters to qualify. Those changes are estimated to provide $200,000 million in tax relief to help offset the new money going towards roads. The plan also allows for time to see how the new system is working, and starting in 2023 a new budgetary mechanism will begin to automatically lower future income tax rates if the state is generating too much new additional revenue.
Decades of underfunding got us to where we are today, and this new legislation marks the largest transportation investment in the state in 50 years. In my view, the proper funding of infrastructure is a core function of government, and we need to ensure that we don’t look at these changes as an end to a problem, but as the beginning of a renewed focus on proper governmental prioritization. We will be holding townhall meetings in Branch, Hillsdale, and Jackson Counties later this year to answer any additional questions you might have and to listen to any requests or concerns.
Everyone benefits from our roads, whether you are driving on them yourself, relying on the bus, having packages delivered, or letting emergency services or utility workers do their jobs. Better roads also attract new businesses and employment that will help continue our state’s economic turnaround. We hope you will be able to join us at an upcoming townhall, and we will be providing times and locations soon.