Surprise Surprise, what appears to be out of the blue the Michigan House of Representatives passed a $1.2 billion dollar road funding plan.  Now on to the Senate it goes.

I say I am surprised because we heard nothing about them being close to a deal and surprisingly it appears there were no leaks, at least none that I heard of.  I know they have been working on a plan but did not know they were close.

An article in the Detroit News informs us that the state House presented and approved on a party line vote a new roads funding plan last night.  The plan combines higher fuel taxes and vehicle registration fees with a shift in funds from the general fund to infrastructure.

I know the Michigan Senate had a plan they were creating some call the 400-400-400 plan and the Senate leadership wanted the House to vote on that plan.  That plan was being designed by the legislative leadership. The 400-400-400 plan is reported to include:

  • A 6.5-cent increase in the gas tax, which would hike the 19-cent current tax to 25.5 cents and raise $400 million in new revenue.
  • Eliminate the discount drivers now receive on their registration fees when they buy a new car, increase fees on electric cars and heavy trucks, generating $400 million in new revenue.
  • Shift $400 million from the general fund to fund the roads.
  • Lower the state’s income tax rate when the economy is booming.

The House plan is a nine-bill package that they predict would raise $1.2 billion a year to bring repair funding up to the level our transportation officials say is necessary to stop the Michigan’s road condition deterioration, but not until the 2020-21 fiscal year.

Michigan’s House of Representatives plan:

  • calls for $600 million in new revenue from fuel tax and registration fee hikes and
  • $600 million that would be earmarked in the state’s General Fund budget for road repairs annually. The General Fund dollars is expected to come from annual state revenue increases. The concern by many is that this shift could results in decreases of other programs currently funded from the General Fund in the years when revenue increases are insufficient.
  • The 19-cents-a-gallon state gasoline tax would be increased by 3.3 cents in 2018. The 15-cent diesel tax would rise by 7.3 cents in 2017. There is an automatic annual fuel tax increases tied to the inflation rate, but the increase is limited to a maximum of 5% a year.
  • License plate fees would increase by 40 percent starting in October 2016. The bills also include a surcharge on electric vehicle registration fees.
  • There is also phased increases in the income tax deductible Homestead income tax credit, including the level of income allowed before it starts to phase out, beginning in 2017. The phase-out income range, now $41,000 to $50,000 to $51,000 to $60,000 in 2018 and beyond
  • Also included is a yearly reduction in the 4.25% personal income tax, starting in the 2022 tax year, if revenues outpace inflation. Of note if this provision were currently in effect, the rate in the 2016 tax year would have dropped to 3.92% and reduced revenue by $680 million, according to the House Fiscal Agency.

The plan would raise approximately $400 million when it started in the 2017 budget year but they hope would eventually boost funding by even more than $1.2 billion after 2021 because of a built-in inflation factor allowing automatic fuel tax increases.

In the past Governor Snyder has said he opposed relying on more than $400 million in General Fund revenue.  His concern was any amount higher than $400 million.  He thinks that anything higher than that could be risky and force cuts in other major programs.

Apparently an organization which represents business Leaders for Michigan, a group representing 80 of the state's leading corporations, blasted the plan as “fiscally irresponsible.”

What are your thoughts about this new plan?

If something truly must be done could there be a better way?

Should whatever plan Michigan’s House and Senate agrees upon be put up to a vote by the citizens of Michigan?

As I have said in the past our politicians have squandered the trust of the people so we no longer know when to truly believe them or not.

Let’s discuss this today on my program, The Live with Renk show, which airs Monday through Friday 9 a.m. to noon, to let me know your thoughts at (269) 441-9595.

Or please feel free to start a discussion and write your thoughts in the comment section.