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Michigan legislative leaders looking to boost road funding but still debating sales tax solution

Tuesday, September 10, 2013   (0 Comments)
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LANSING, MI -- Legislative leaders are working with Gov. Rick Snyder to find new money for Michigan roads, but they have not reached agreement on any solution likely to include some form of new tax revenue.

Snyder, who is pushing for $1.2 billion a year in new road funding, has been meeting this summer with Senate Majority Leader Randy Richardville, Senate Minority Leader Gretchen Whitmer, House Speaker Jase Bolger and House Minority Leader Tim Greimel.

The MIRS subscription newsletter reported Monday that the quadrant leaders "are moving toward a package" that would devote all revenue collected at the gas pump -- including fuel excise and sales taxes -- to roads while boosting the state sales tax by one percent to replace lost revenue currently earmarked for schools and cities.

But talk of an imminent compromise may be premature.

"There are ongoing discussions but no agreement has been reached," said Ari Adler, a spokesperson for Bolger and House Republicans. "As discussions have progressed, unfortunately, there are some who are making demands that make it sound like they are on the road to all or nothing. That would be unfortunate."

Michigan is among a small handful of states that charge sales tax on fuel, but it does not devote any of that revenue to roads. Instead, most sales tax money is used for K-12 education and municipal revenue sharing.

Shifting some sales tax revenue to roads would hurt funding for schools and cities. Raising the sales tax from 6 percent to 7 percent would make up for that loss, but it would require a 2/3 majority vote in the Legislature followed by public approval at the next statewide election.

"Logistically, it makes sense," said Lance Binoniemi, vice president of government affairs for the Michigan Infrastructure and Transportation Association, which has aggressively lobbied for new road funding. "But we've always said whatever compromise the Legislature comes up with, we're going to be supportive."

A sales tax increase devoted to school and cities -- rather than roads -- could be more palatable for Michigan voters. But as MIRS reported, that could still be a tough sell in the Legislature, where Democrats are seeking a guarantee that Republicans will not seek to repeal the state's prevailing wage law.

"That's on the table, along with a lot of other issues," confirmed Greimel spokesperson Katie Carey, who said talks have progressed but not produced any concrete agreement.

Bob McCann, a spokesperson for Whitmer, refuted the suggestion that a final road funding deal is in the works. Senate Democrats don't like the idea of a sales tax increase, he said, and are seeking more money for schools -- not just a new source for current funding.

"The good news is that they're still talking, and they're going to keep talking," McCann explained. "It's never gotten to the point where anyone thinks this can't get done. We're not so far apart that people are throwing up their hands and saying, 'We can't do this.'"

Snyder, in his budget proposal released in February, originally called for increased fuel taxes and registration fees, arguing that investing in infrastructure today would be more cost efficient than delaying repairs and facing a higher bill in the future. His proposal failed to gain ground in the Legislature.

If a deal is reached, the sales-tax question could still go before Michigan voters by November of this year. A constitutional amendment requires a 2/3 majority vote in the Legislature at least 60 days before a general or special election.

The Michigan Senate, which would have to vote first, is scheduled to reconvene in late August. The Michigan House will convene on September 3 and is tentatively scheduled to meet the following day.

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