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Price of gas, vehicle registration fees would go up under new legislation

Monday, January 23, 2012   (0 Comments)
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LANSING -- Legislation to be introduced at the state Capitol next week would boost the price of gasoline by about 9 cents a gallon and increase the average motor vehicle registration fee by about $60 a year, officials said Friday.

A bipartisan package of 13 bills -- designed to collect an extra $1.4 billion annually to fix crumbling roads and bridges -- could be introduced in the House and Senate as early as Tuesday, said Rep. Rick Olson, R-Saline, who will sponsor the gas tax bill.

The bills have support from the Michigan Chamber of Commerce -- one of the state's most powerful lobby groups -- but face a tough fight in an election year for state House members.

"I think we can come up with extra road money without raising taxes," said Rep. Paul Opsommer, R-DeWitt, chairman of the House Transportation Committee, in a sign of the obstacles the measures face.

Gov. Rick Snyder told Free Press editors and reporters Friday that he favors additional road money but wouldn't take a position yet on the sources or timing of the revenue because "if we took a position too early, it would cause a lot of polarization."

"We need better roads and bridges," Snyder said. "I never frame an issue that we need to be spending more money."

What they would do
The bills would:

• Raise an extra $541 million by eliminating the 19-cent-per-gallon retail tax on gasoline and the 15-cent-a-gallon retail tax on diesel and applying a new wholesale tax on both types of fuel. Olson did not know the percentage rate, which would generate additional revenues as the price of fuel increases. But based on current prices, it would result in a tax of 28.3 cents per gallon for regular gas, or 9.3 cents more than consumers now pay.

• Raise an extra $500 million to $600 million by hiking motor vehicle registration fees about $60 on average, with owners of cheaper vehicles paying a smaller increase and owners of pricier vehicles paying a higher one.

• Divert about $100 million to roads from the 6% sales tax on gas. Today, about two-thirds of the sales tax from gasoline goes to schools, and the rest goes to the general fund.

• Collect another $200 million-$250 million by removing loopholes in vehicle registration fee collections. For example: Registration fee deductions that new car purchasers receive as their vehicles age would be eliminated.

Olson, who coauthored a bipartisan report on Michigan's road needs, said the state needs additional money immediately, not in phases. Otherwise, roads and bridges will continue to deteriorate and cost more to repair later, he said. "This is the most fiscally conservative way to do it."

Slow change?
But a major supporter of the bills said Friday that the increases can't come all at once.

"No one is seriously proposing that that happen next week or next month," said Chamber of Commerce President and CEO Rich Studley. "I think that will likely be phased in."

Still, "revenue neutral doesn't cut it," Studley said.

There's no point in spending tens of millions of dollars annually on a Pure Michigan campaign to attract visitors who land at excellent airports in Detroit and Grand Rapids, only to "have a teeth-rattling experience on second-class roads," Studley said.

Leon Drolet, chairman of the Michigan Taxpayers Alliance, said far too much road money is wasted on projects such as the Detroit People Mover, public transit buses that run empty and unnecessarily high project costs through prevailing wage laws.

"We're nowhere close to the point where we should be asking folks to pay more," Drolet said.

Opsommer, the chairman of the House Transportation committee, said the Legislature will find up to $300 million more for roads without raising taxes.

House Speaker Jase Bolger wants to first look for efficiencies and explore spending more of the existing sales tax money from gasoline on roads, said Bolger spokesman Ari Adler.

"Then next year, when we have more time, we can come up with the type of money that ... the governor and the chamber are talking about," Opsommer said.

Opsommer said he's reluctant to increase the gas tax because the increase in hybrid vehicles coupled with higher fuel efficiency standards is already cutting into gas tax revenues.

"We've got to find another source," he said. "But if we can get to $300 million, then we'll ask the state, counties and locals to be patient."

Tax promises

Mike Nystrom, executive vice president of the Michigan Infrastructure and Transportation Association, said pledges by politicians to never hike taxes -- which he described as abdications of responsibility -- are obstacles in a push to approve the bill package.

In Michigan, four of 38 state senators and 18 of 110 House members have signed the Taxpayer Protection Pledge promoted by Americans for Tax Reform and its president, Grover Norquist, according to the group's website.

Among the signers is Olson. He said he won't violate the pledge by introducing the gas tax bill because the pledge allows an exception for user fees.

A Norquist spokesman did not respond to an e-mail seeking confirmation of the user fee exemption and whether a gas tax would qualify as a user fee.

But even with generally tax averse Republican majorities in both legislative chambers, Snyder was able to increase taxes on pension income last year to partially offset a $1.7-billion business tax cut.

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