Michigan Road Funding Deal In Doubt With Deadline A Day Away

LANSING (WWJ/AP) - Gov. Rick Snyder and legislative leaders met Wednesday to negotiate a potential tax increase to improve Michigan's roads, as chances rose that no deal will be struck before lawmakers adjourn for the year.

Thursday is the final voting day of the two-year session, and top legislators are running out of time to pitch a compromise proposal to rank-and-file members of the Republican-led Legislature. The Senate and House approved vastly different plans after the November election.

One would more than double gasoline and diesel taxes over four years. The other would eliminate the sales tax on fuel within six years and increase per-gallon gas and diesel taxes by the same amount, averting a tax increase by moving money for schools and local governments to road and bridge construction.

Another bill pending in a House-Senate conference committee could boost license plate revenue by no longer letting registration fees drop by 10 percent a year for the first three annual plate renewals.

Snyder and legislative leaders say at least $1.2 billion more a year is needed to bring highways, streets and bridges up to par. Vehicle registration fees and taxes at the pump account for $2 billion in annual transportation infrastructure spending. But other than agreeing on the amount needed and that the state's flat per-gallon fuel taxes should be based on wholesale prices instead, they have sharp differences.

Republican House Speaker Jase Bolger does not think the entire $1.2 billion should come from new taxes and wants to make sure all taxes at the pump pay for transportation projects. The GOP governor, Republican Senate Majority Leader Randy Richardville and Democrats worry about harming K-12 and municipal budgets as a result.

Richardville hinted Wednesday that the Legislature could put a sales tax-related road funding plan on the statewide ballot without first passing a fuel tax increase that would take effect if voters reject the ballot initiative.

"In a perfect world it's always best to have the safety net. Sometimes you do, sometimes you don't though," he told reporters after leaving a meeting at the Capitol with Snyder and legislative leaders that resulted in no agreement.

More high-level meetings are expected throughout the day and possibly into the night.

Ideas for generating an additional $1.2 billion for roads have "moved around quite a bit in the last few days and we're not done yet," Richardville said.

Negotiators are cautious about boosting fuel taxes too high and making sure a tax increase does not disproportionately affect lower- and middle-class taxpayers, Snyder said Tuesday night.

"If you go through that list of criteria, it's really how do you take the House plan, the Senate plan and come up with a compromise that can check the boxes that meet those needs," Snyder said.

He insisted talks are "moving forward" and "we are not just going in circles."

Bolger said it is "a difficult issue that's gone unresolved for a couple decades."

Both the House and Senate agree that Michigan should convert its flat gasoline and diesel taxes to taxes based on the wholesale price of fuel, to keep pace with construction costs. But they differ sharply on how to generate roughly $1.2 billion more per year in transportation funding, the minimum many advocates say is needed just to bring roads up to par.

The Senate voted to more than double Michigan's 19-cents-a-gallon gas tax over four years, based on today's wholesale prices. The House voted to not significantly raise taxes overall and instead repeal the 6 percent sales tax at the pump over six years and increase the gas tax by an equivalent amount.

Snyder, a Republican, opposes the House plan because it would redirect revenue to roads that mostly goes to schools and local governments.

MORE: House Approves Road Funding Bill, Using Money Which Would Go To Schools, Local Governments

Michigan Senate Votes To Double Gas Tax To Pay For Road Repairs

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