Michigan Governor Signs Road-Spending Bills With Tax Hikes

By DAVID EGGERT
Associated Press

ALAIEDON TOWNSHIP, Mich. (AP) - Gov. Rick Snyder signed a $1.2 billion road-spending package into law Tuesday that includes the first increase in decades in Michigan's fuel taxes and vehicle registration fees in an attempt to address the deteriorating highways, roads and bridges across the state.

The move comes four years after Snyder first called for a comprehensive road-improvement plan, as lawmakers tussled over funding methods and voters rejected a later proposal that asked them to raise the sales tax to pay for it.

The legislation finally approved drew almost all its support from Republicans, after Democrats criticized higher taxes, the future implications for other parts of the budget and a five-year delay in permanently pumping the $1.2 billion into the system.

"This is the largest investment in transportation in Michigan in the last 50 years," Snyder said as he signed the bills at the Michigan Infrastructure & Transportation Association, a construction trade group. "Let's remember that and let's be proud of that."
States around the country have been struggling with deteriorating roads and how to pay for fixing them. About one-third of the states have approved measures this year that could collectively raise billions of dollars through higher fuel taxes, vehicle fees and bonds to repair old bridges and roads and relieve traffic congestion.

In neighboring Wisconsin, lawmakers last week approved $350 million more in borrowing for major road construction projects. Indiana is considering whether to divert $250 million from reserves while borrowing another $250 million to rehab its highways. Majority Republicans in both states have come under criticism for not coming up with adequate long-term solutions.
When Michigan's tax and fee increases take effect in January 2017, they will be the state's first fuel tax hike in 20 years and the first major vehicle fee hike since 1983, when it switched from basing registration taxes on vehicle weight to list price.

The gasoline tax of 19 cents a gallon will increase by 7.3 cents and the diesel tax of 15 cents a gallon will go up 11.3 cents, with automatic annual inflationary adjustments in 2022 and after. Vehicle registration fees will rise 20 percent. The measure also permanently shifts existing state funds toward road work starting in three years.

"Overnight, are we going to have $1.2 billion? No. But this gets us on that path to that solution," Snyder said, calling the future inflationary increases in fuel taxes "critically important."

Michigan's net annual spending increase will total $825 million within five years once the plan is phased in, a 19 percent boost to the overall $3.9 billion transportation budget and a 31 percent jump in state funding.

The legislation also makes more homeowners and renters eligible for an expanded property tax credit starting in 2018. Income tax cuts could be triggered later if general fund revenues grow by a certain amount.

Michigan Chamber of Commerce President and CEO Rich Studley called it a "major step forward" that will help the state's three leading industries - agribusiness, tourism and manufacturing - which all are heavily dependent on transportation infrastructure.

Democrats hoping to win back control of the state House launched ads targeting four Republicans in swing districts who supported the bills.

"Every year on their birthday, Michigan drivers will be reminded of the increased registration fee, which is the latest in a long line of Republican legislation that has taken money from everyday families and given it to big corporations and the top 1 percent," House Minority Leader Tim Greimel said.

John Daly III, manager-director of the Genesee County Road Commission, said the funding package "represents a good start." But he noted there are "unknowns" ahead because it will be up to legislators to decide on a yearly basis whether to honor the law that transfers $600 million in general funds to roads in the 2020-21 fiscal year and after.

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