Senate passes comprehensive road funding plan

 

Blog - Roads graphicSenate Majority Leader Arlan Meekhof, R-West Olive, issued the following statement upon the passage of a plan to fund Michigan’s roads:

“The Senate Republicans passed a commonsense, responsible plan to repair our roads and in doing so renewed our commitment to making government more accountable and efficient. The core principles of the plan remain the same: Existing resources are redirected to reflect roads as a priority in the state budget, new revenue is generated for a long-term solution and taxpayer dollars are returned to our hardworking taxpayers.

“Road funding and the condition of our roads have been growing concerns over the past several years. We have seen different iterations of a road funding solution, but none that garnered enough support to begin the process of repairing and adequately funding our roads. It has taken years to come up with a road funding plan and in that time the cost of bringing our roads up to better standards has increased. No one likes to pay more for services, but the people who drive the roads and cause wear and tear on the roads should contribute to road maintenance. Additionally, as technology improves and driving habits change, we know we need to diversify how we pay for roads and a responsible increase in registration fees brings added stability to road funding.

“State government has a responsibility to maintain safe roads and bridges and the people of Michigan expect the Legislature to address this issue and meet basic infrastructure needs. I had hoped that the legislature could pass a plan with strong bipartisan support, but unfortunately few Democrats were able to put politics aside and be part of a solution. I am grateful for my colleagues on the other side of the aisle who joined with my caucus to vote for a commonsense road funding plan, and I am disappointed by Democrat leaders who chose to sit out their responsibilities in favor of throwing political punches.

“I have been realistic in my expectations that ultimately a road funding plan would include compromise in order for all parties to agree. For me, long-term tax relief had to be a component of the plan. I firmly believe that we can always find ways to make state government more accountable and responsible. We are asking for more from our taxpayers in order to improve our state and it only makes sense that we return available dollars to our hardworking families.

“My Senate colleagues and I have demonstrated that we are committed to improving our roads and reforming transportation funding. The bottom line is the citizens of Michigan made it clear that road funding should be a priority of state government. The priorities of the taxpayers are the priorities of the Michigan Senate. I look forward to passage by the House and support from the governor.”

Under the Senate-passed plan, beginning in Fiscal Year 2019, $150 million in General Fund revenue would be redirected and dedicated to a newly created section of the Michigan Transportation Fund. In FY 2020, the redirected revenue would grow to $325 million and then to $600 million in FY 2021 and beyond making roads a priority for state spending.

Additional revenue would be raised through an increase in the state gas tax and diesel tax to 26.3 cents on Jan. 1, 2017. The gas and diesel tax rates would then be indexed to the rate of inflation beginning Jan. 1, 2022 in order to keep pace with the increasing costs of maintaining roads and bridges. This change in fuel tax rates is expected to generate $400 million when fully implemented.

In addition to an increase in fuel taxes, another $200 million would be generated from a 20 percent increase in registration fees for passenger vehicles and trucks effective Jan. 1, 2017.

When fully implemented, the combination of redirected funds and new revenue would result in approximately $1.2 billion for Michigan roads and bridges.

The Senate plan also presents an opportunity to control the growth of government. Senate Bill 414 creates an automatic rollback of the state income tax rate each year that General Fund revenues exceed inflation.

Each fiscal year, General Fund expenditure growth would be limited to the rate of inflation times 1.425 with the initial rollback scheduled to begin on Jan. 1, 2023. Economic growth over and above the designated rate would be returned to the taxpayers in the form of an income tax rate reduction.

Beginning in Fiscal Year 2018, changes to the Homestead Property Tax Credit will result in $200 million in tax relief for families.

Additional bills in the package also require road construction warranties. MDOT and local agencies would be required to competitively bid for most projects that exceed $100,000 and townships would be encouraged to issue Requests For Proposal for projects of a certain amount that include at least 50 percent township resources. The plan also creates the Roads Innovation Fund to hold the state accountable for road quality.

To keep pace with changes in technology, the package institutes a process and fee schedule for taxing alternative fuels and imposes an additional registration fee for hybrid and electric vehicles.

The package is comprised of Senate Bill 414 and House Bills 4730, 4376, 4737 and 4738.

For more information please visit www.fixingmiroads.com.

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