Michigan House approves roads funding package

Plan would add $1.2 billion to roads budget by 2021

LANSING, Mich. - The Michigan House of Representatives has passed a package of bills that would increase state road funding.

Half of the funding will come through new revenue while shifts in money from the general fund will pay of the other half of this roads funding increase. The plan increases vehicle registration costs by an estimated 40% for most drivers and the increases fuel tax 3.3 cents per gallon beginning in 2018

The main components are:

  • A 3.3-cent increase in the state's 19-cents-a-gallon gas tax in October 2018, with annual inflationary hikes in 2022 and after;
  • A 4-cent hike in the 15-cent diesel tax in October 2017 and a 3.3-cent increase in October 2018, with inflationary adjustments in 2022 and beyond;
  • A 40 percent boost in license plate fees in October 2016, averaging $40 more per passenger vehicle;
  • A dedicated annual shift from the $9.9 billion general fund to the roads budget, starting at $150 million in 2018-19 and rising to $600 million in 2020-21.

Also included are:

  • A yearly reduction in the 4.25 percent personal income tax, starting in the 2022 tax year, if revenues outpace inflation. If the provision were currently in effect, the rate in the 2016 tax year would have dropped to 3.92 percent and reduced revenue by $680 million, according to the House Fiscal Agency.
  • A an expanded income tax credit for homeowners and renters, so more those earning up to $60,000 are eligible — above the current $50,000 limit
  • and the credit itself is bigger.

Overall, it is expected to raise an additional $1.2 billion annually for roads by 2021. However, initially, it is expected to increase funding by about $400 million.

"It's important to recognize that better roads mean less taxpayer expense, as is," said Republican Rep. Curt Heise.  "A recent report showed that the average Michigan driver spends over $300 in vehicle maintenance and repairs based solely on the poor state of our roads. 

The House voted around 9:00 p.m. on Wednesday night for several bills including House Bills 4730, 4736, 4738, and Senate Bill 414 to approve the plan.

"This is the compromise that fixes our crumbling roads, meets in the middle and covers almost every priority the House, Senate and governor all said they wanted in a plan," said Michigan Speaker of the House Kevin Cotter. "Hopefully, we will see quick action on this compromise and a permanent solution to Michigan's road funding crisis."

While the plan received support from the Houses' Republican majority, Democrats largely opposed the legislation. They argued the bills unfairly shifted the tax burden for roads to lower and middle income taxpayers.

"In the four months since House Republicans last introduced this plan, they've failed to improve on it. In fact, they've made it worse," said House Democratic Leader Tim Greimel. "It wasn't enough for House Republicans to take $600 million out of vital state programs – including public safety, schools and health care – they now want to undermine those programs further by giving an income tax break for the state's wealthiest people."

The plan requires Senate approval before can go to the governor to be signed into law.

You can read the House Fiscal Agency's full report on this roads package below:

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