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Sales tax hike for Michigan road repairs may go to voters in May

Friday, January 18, 2013   (0 Comments)
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EAST LANSING — Michigan residents could vote in May on whether to adopt a legislative plan to hike fuel taxes and vehicle registration fees to pay for road repairs or a second option that would involve a 2-percentage-point increase in the state’s 6% sales tax.


Sen. Roger Kahn, R-Saginaw, who is heading up a $1.2-billion road funding package backed by Gov. Rick Snyder, has briefed road builders and others on his legislative plan, said Mike Nystrom, executive vice president of the Michigan Transportation & Infrastructure Association.


The plan would involve passing legislation to remove the 19-cent-a-gallon gasoline tax that motorists pay at the pump and to impose a sales tax on the wholesale level, along with vehicle registration fees together aimed at raising the targeted amount, Nystrom said. But if passed, the legislation would be tie-barred to a joint resolution calling for a statewide vote on another option to fund roads — amending the state constitution to increase the state sales tax and dedicating the amount raised from the 2-percentage-point hike to fixing and maintaining the state’s roads and bridges.


Voters would be asked whether they want the plan the Legislature adopted or the sales tax plan, which would also remove the 19-cent-per-gallon gas tax, Nystrom said. Choosing neither would not be an option.


Kahn wants the Legislature to deal with the issue by early March so the question could be put to voters on a May ballot, Nystrom said during a taping today of “Off the Record” on WKAR-TV in East Lansing.


Snyder said in his State of the State address on Wednesday that Michigan urgently needs the additional road funding to protect its infrastructure investment or taxpayers will be forced to pay far more for bigger repairs in future years.


Bill Rustem, Snyder’s director of strategy, said Snyder is open to the public vote on the sales tax increase as long as it is presented as an alternative to a plan dealing with gas taxes and vehicle registration fees already passed by the Legislature.


Nystrom said either approach solves the issue, but he likes the sales tax approach because it provides for greater revenue growth over time.


He said he expects resistance to the sales tax approach from people in education who believe sales taxes should be used to support schools not roads.


The increased road funding could be in for a tough fight, given resistance by Republicans to anything that can be described as a tax increase and continuing anger from Democrats over the passage of right-to-work legislation in the lame-duck session in December.


“This is going to be a tough vote,” Nystrom said.


A statewide vote presenting a similar either-or proposal was used under Gov. John Engler in 1994 to approve Proposal A to fund Michigan schools.


Kahn, who said Wednesday that the governor’s sales tax and registration fee plan could be blended with his own plan to increase the sales tax, could not be reached for comment.

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