Michigan OKs Fuel Tax Increase in $1.2 Billion Infrastructure Plan

After making little progress for months in producing a bipartisan highway bill, both chambers of the Michigan Legislature passed two bills not long before midnight Nov. 3 that eventually will deliver $1.2 billion for the state’s roads.

Gov. Rick Snyder, a Republican, said that he’ll sign the bills, which rely on $600 million in revenue from Michigan’s general fund (beginning in 2019), $400 million in increases to fuel taxes and $200 million from higher registration fees.

“This is the largest investment in transportation over the last 50 years in terms of revenues coming in for roads,” Snyder said at a news conference. “This will lead to safer and better roads in our state and do it in a fiscally responsible way.”

The switch from fighting to funding wasn’t easy. The fuel tax hikes passed the Senate 20-18 and in the House 55-52.

The 20% vehicle registration fee increases of $332 for 80,000-pound trucks and $20 for an average car passed the Senate 20-18 and the House 54-53. Only one Democrat in each chamber joined the Republican majorities to approve the bills.

Fuel taxes, which are now 15 cents a gallon for diesel fuel and 19 cents a gallon for gas, would be equalized first at 19 cents and then increase by 7.3 cents per gallon Jan. 1, 2017. Beginning in 2022, the tax would go up annually by 5% or the rate of inflation, whichever is less.

The Michigan Trucking Association, which had opposed the previous House bill because of a 40% increase in registration fees, approved of the legislation that passed.

“We’re glad that something is being done for the roads for the first time in a very long time,” Executive Director Walter Heinritzi said. “We’re happy to pay our fair share.”

While some of the registration fee and gasoline tax revenue in the legislation will go to rail and transit, all of the general fund money would go toward roads.

“This is a large accomplishment . . . a plan that we can all be proud of,” Speaker Kevin Cotter said during the press conference with Snyder and Senate Majority Leader Arlan Meekhof.

“From the very beginning, it was very clear that fixing Michigan’s roads would be a key to fixing Michigan, but it hasn’t been an easy task,” Meekhof said, according to local reports.

Democrats blasted the plan, saying that the Republicans hadn’t identified how the cuts would replace the $600 million from the general fund.

“Legislative Republicans have failed our state,” House Democratic Leader Tim Greimel said. “The Republican proposal raises taxes on middle-class families, does nothing to lower truck weights and drains funding from education and public safety. Even worse, it doesn’t even start fixing our roads until 2021.”

An analysis by the Senate Fiscal Agency said the bills would increase transportation funding by $452 million in fiscal 2017, $608 million in 2018, $763 million in 2019, $944 million in 2020, and $1.2 billion in 2021. The analysis said the plan would reduce Michigan’s general fund by $356 million in 2019, $531 million in 2020 and $806 million in 2021.