House Panel Takes Up Michigan Road Funding Bills

By DAVID EGGERT, Associated Press

LANSING (AP) - A key lawmaker working to raise more money for Michigan roads said he hopes to recommend a package of bills for consideration by early May, a sign that legislators may be getting more serious about a boost in taxes and fees to maintain crumbling highways and streets.

House Transportation and Infrastructure Chairman Wayne Schmidt, R-Traverse City, had an initial committee hearing on his legislation Tuesday. That was significant to road-funding advocates because it was first time the Republican-led Legislature took testimony on actual bills since Gov. Rick Snyder called for at least $1.2 billion in increased gasoline taxes and license plate fees in January.

Schmidt's plan has similarities to one proposed earlier in the Senate. It would convert motor fuel taxation from a fixed per-gallon tax to one based on price, accounting for increasing construction costs and declining funding from people driving less and with more fuel-efficient cars.

The 19-cents-a-gallon gas tax would go up 11 cents if gas is $3.50 a gallon and 15 cents at $4 a gallon, while the 6 percent sales tax on gas purchases would be eliminated - meaning motorists ultimately would pay lower taxes at the pump.

Though roads and bridges would receive an influx of money - $585 million to $829 million - schools and local governments would lose $850 million in revenue from the sales tax on fuel, according to the nonpartisan House Fiscal Agency.

"How do you replace that?" said Schmidt. "There's going to be a lot of discussion in the next couple weeks."

One scenario is asking voters to raise the sales tax from 6 percent to 7 percent. Lawmakers missed a deadline to put a Senate-sponsored constitutional amendment on the May ballot, though they could call a special election at any time or place a proposal on the August ballot.

By early May, Schmidt said he wants to make a recommendation to House Speaker Jase Bolger on how to move ahead. Schmidt added that bills will be introduced soon to raise registration fees on hybrid, electric and propane-powered vehicles, and he thinks savings can possibly be found in other parts of the state budget so more money is available for roads.

The hearing came a day after conservative group American for Prosperity-Michigan announced a statewide tour to oppose tax hikes for road repairs.

"Raising taxes on Michigan's families shouldn't even be an option on the table," said state director Scott Hagerstrom.

A Snyder administration official told the committee that the Republican governor supports the House plan along with his own.

"The point is we need revenue," said Kelly Bartlett, director of governmental affairs for the state Department of Transportation. He urged lawmakers to ensure road funding can grow over time and consider that - long term - relying on fuel taxes is not sustainable. A legislative analyst said gasoline consumption in Michigan peaked in 2002 and has declined 2 percent a year ever since.

The state's main transportation fund is at its lowest level in 30 years when adjusted for inflation.

"We have no way of really raising revenue. We're depending on the state Legislature for that support," Roy Townsend, managing director of the Washtenaw County Road Commission, told the panel. He said he could see more townships passing special property tax assessments for road maintenance in subdivisions and neighborhoods, but counties need state aid for primary roads.

The head of the state's road building lobby said Michigan is among just six states to collect a sales tax on gasoline and is the only one to dedicate none of it to roads. Many people wrongly believe that as fuel prices rise, there is a "windfall" for roads when funding is actually dropping, said Mike Nystrom, executive vice president of the Michigan Infrastructure & Transportation Association.

There was some discussion among committee members about making Interstate 94 - the main highway across southern Michigan - a toll road since nearby Ohio, Indiana and Illinois have major turnpikes that help with transportation funding. Such a move would be unpopular, and Nystrom said it would be illegal under federal law.

Rep. Peter Pettalia, R-Presque Isle, said he knows lawmakers have to boost road spending yet raised concerns about relying on fuel taxes when consumption is dropping. A lobbyist for cities questioned what would happen if the sales tax on fuel is not replaced, and the oil lobby urged legislators to favor vehicle registration fees over higher gasoline taxes.

"As our economy is starting to rebound, now is exactly the time to double down and get our transportation network going," Schmidt said.

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