LANSING (AP) – The Michigan House adjourned Wednesday night without a road-funding deal, with Gov. Rick Snyder and Democrats opposing the budget ramifications of dedicating $600 million in existing income taxes to transportation infrastructure.
Even if the Republican governor were OK with redirecting that much general fund revenue to roads and bridges, it was uncertain if the GOP-led House could muster support for another $600 million in unspecified fuel and vehicle registration tax hikes.
Voters in May defeated a sales tax increase that would have triggered more money for roads, education and municipalities. Both chambers responded by passing different plans in June and July, and legislative leaders tried for a compromise this week. The House and Senate will return after Labor Day.
Snyder is concerned with transferring $600 million from the $9.9 billion general fund, which will be squeezed further in coming years under the state’s Medicaid expansion and if revenue from a health insurance tax continues to fall short.
“He has expressed some concerns that we have to be really careful to identify how we use the $600 million,” Snyder spokeswoman Sara Wurfel said Wednesday night. Snyder will have events in the Upper Peninsula Thursday and leave Friday for a nine-day trade trip in China.
The House, unlike the GOP-controlled Senate and Snyder, is resistant to a significant fuel tax hike. It was in session for a second straight day after a monthlong break. Rank-and-file members, who off and on sat at their desks for nearly 11 hours while talks were held behind closed doors, occasionally cast votes to repeal archaic laws such as cursing in front of women and children.
Democrats, whose votes likely would be needed for fuel tax increases, also sought assurances that a business-backed petition drive to rescind the state’s 50-year-old prevailing wage law will not reach the Legislature.
“The $600 million is a huge problem from the perspective of everybody in our caucus,” House Minority Leader Tim Greimel said. “We are very united in joining others, including the governor’s administration, in believing that that is an unrealistically unsustainable, fiscally irresponsible approach.”
The budget that will take effect in October includes a record-high $400 million general fund transfer to transportation.
The other half of the additional $1.2 billion in permanent funding for transportation infrastructure could come from a 5-cent increase in the state’s 19-cents-a-gallon gas tax and a 9-cent hike in the 15-cent diesel tax, along with higher license plate fees. Both fuel taxes would ultimately rise higher with inflation.
“Unfortunately, our negotiations have been a bit derailed in other things that are not roads,” House Speaker Kevin Cotter said.
Snyder favors a law that ensures “prevailing” wages are paid on many state-financed construction projects, but conservatives are seeking to bypass his veto with initiated legislation for which they must gather hundreds of thousands of voter signatures. If signatures are submitted and legislators do not pass the measure, it would be put to a statewide vote in 2016.
Chris Fisher, president of the Associated Builders and Contractors and a member of the Protecting Michigan Taxpayers ballot committee, said the group’s repeal effort would continue.
“This is a stand-alone issue,” he said. “Safe, quality roads is an important issue that stands on its own merits. It should be treated as such.”
Republicans, meanwhile, said an income tax cut was still in the mix as part of road-improvement discussions. The Senate voted this summer for a 15-cent gas tax increase, while also approving a bill to cut Michigan’s 4.25 percent individual income tax each year that general revenues rise by more than inflation.
“It’s still very much in consideration. It gives some people pause, especially the way it’s written. It’s a very important piece for some of the (lawmakers),” said Rep. Jeff Farrington, R-Utica, who chairs the House Tax Policy Committee.
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