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Michigan governor's plan to fix roads would make fuel taxes highest in US

DETROIT, MI - AUGUST 8: Gretchen Whitmer, Michigan Democratic gubernatorial nominee, speaks with people after a Democrat Unity Rally at the Westin Book Cadillac Hotel August 8, 2018 in Detroit, Michigan. Whitmer will face off against Republican gubernatorial nominee Bill Schuette in November. (Photo by Bill Pugliano/Getty Images)

LANSING, Mich. – Democratic Gov. Gretchen Whitmer called Tuesday for nearly tripling Michigan’s per-gallon gasoline tax to make it the highest in the nation in order to reverse the deteriorating condition of the roads.

The proposal follows her November election victory over Republican Attorney General Bill Schuette in part on a campaign promise to “fix the damn roads.”

The $2 billion plan would increase the 26-cent fuel tax by 45 cents by October 2020. To alleviate the burden for some, she proposed a tax overhaul under which retirees and low-income earners would get breaks while more businesses would pay corporate income taxes.

The proposal is an attempt to reverse parts of a tax rewrite enacted by her Republican predecessor, Rick Snyder.

“No one likes to raise taxes,” she told lawmakers during her first budget address as governor. “I wish I didn’t have to come here today and put this budget before you because I know it’s hard. But the hard truth is we got to get to work. Every day we don’t we are jeopardizing our economic future, wasting our money and endangering our people.”

Her road-funding plan is expected to face resistance in the Republican-controlled Legislature, which passed fuel and vehicle registration tax hikes that took effect in 2017 but have been criticized as not generating nearly enough revenue. Critics said the tax hikes only slowed the decline of road conditions.

States across the nation are struggling with how to finance road maintenance and construction as vehicles become more fuel efficient and generate less revenue from flat per-gallon taxes.

Whitmer quickly came under criticism from some in the GOP because last year, in a gubernatorial debate, she called Schuette’s warning that she would raise the gas tax by 20 cents “ridiculous” and “nonsense.”

“How can you explain a 45-cent tax increase today?” Rep. Matt Maddock asked Whitmer’s budget director Chris Kolb, who stayed to answer a question following her presentation.

“What we want to do is propose a solution that actually fixes the roads,” Kolb said. “I’ve looked at multiple ways of doing this. Too many of them fall short — in fact don’t allow us to see improvement over time. If we’re going to ask the residents of this state to pay more, they should be able to get success.”

Whitmer said her plan would cost the average driver $23 a month, or $276 a year, but contended that motorists already are paying a “roads tax” for vehicle repairs caused by crumbling infrastructure. She proposed doubling the earned income tax credit for low-income residents, saving families at least $30 a month, and repealing the so-called retirement tax on pension and other income — saving 400,000 households $65 per month.

“Fixing the roads means we’re going to bring down the cost the average drivers spends per year on car repairs,” she said. “So the average person in our state will feel relief.”

Michigan now has the 9th highest combined local, state and federal gas taxes in the U.S., according to the American Petroleum Institute. Under Whitmer’s plan, it would have the highest taxes, easily surpassing states like Pennsylvania and California.

Whitmer also outlined a $507 million boost in K-12 spending , including extra funding to teach at-risk, special education, and career and technical students. Another proposal for the current fiscal year includes a $120 million infusion to improve drinking water infrastructure in the state where Flint’s crisis occurred and $60 million to install hydration stations in schools.