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The Detroit News Editorial: State road taxes need reform

Thursday, February 17, 2011   (0 Comments)
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Anyone dodging the yawning potholes opened by a weekend thaw can see that Michigan has a long way to go before we can proclaim it to be a smooth-roads state. A jarring ride quickly brings home a lesson lost in the euphoria over Gov. Rick Snyder's Detroit River bridge deal: The state still needs a long-term way to aggressively repair and update the highway system if we want to attract businesses, new residents and vacationers from other states.

The bridge deal will keep federal money flowing here for a while, but it's a stopgap measure and not the final solution. It lasts a couple of years, if approved by lawmakers, and then the road repair program goes on the critical list again.

At a Senate Transportation Committee hearing in Lansing last week, the push for new funding came from the industry-related Michigan Infrastructure and Transportation Association, County Road Association of Michigan and Michigan Municipal League. They are frustrated by years of inaction in Lansing.

Lawmakers who assume passage of Snyder's Detroit River bridge deal may be inclined to feel the road funding pressure is off. Under that plan, Michigan would get to consider $550 million forwarded by Canada to be not only its share of the cost of a new bridge between Detroit and Windsor, but also its matching money to draw all of the state's allotted federal transportation funds for a couple of years.

That would keep the state from losing out on hundreds of millions in U.S. road repair dollars for a while, and from having to dramatically scale back its five-year road repair schedule.

Adhering to the current five-year plan would keep Michigan from falling further behind on state road repairs, but wouldn't fully address the growing inventory of local roads and streets that need attention, especially in urban areas such as southeast Michigan.

An often-mentioned road funding strategy calls for a gradual increase in Michigan's 19-cents-a-gallon gasoline tax, the main source of state road money. A drawback to doing so is the 6 percent sales tax Michigan extracts from motorists at the pump on top of the state's gasoline tax and the federal gasoline tax.

The 6 percent sales tax goes to general government spending, mostly schools, and not toward road repairs. It gives Michigan one of the higher combined fuel tax rates in the country, even as the state comes up short on funds for its roads.

It has been suggested that Michigan dump the sales tax, so that a modest boost in the gasoline tax could be made without hitting motorists in the wallet. But educators surely would oppose the loss of that revenue. The sales tax on gasoline raised more than $700 million in 2009.

This is a perfect example of the convoluted tax structure that has grown up in Michigan as lawmakers patched together budget solutions of the past. The system, if it might be called that, is ripe for reform.

Snyder and lawmakers shouldn't stop with the business tax revisions he proposes. A more sensible and sustainable approach is needed toward collecting revenues for other state programs, as well.

Finding a permanent fix for the road repair budget would be a good place to start the additional reforms.

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