On November 10, 2015, Governor Snyder signed a bill package into law designed to improve the condition of Michigan’s roads. Although Michigan’s roads have been among the worse in the nation for several years, the state legislature has failed in their attempt to provide funds for needed repairs. Even the road to our State Capitol Building, Michigan Avenue, is filled with bumps and potholes. Michigan roads continue to be an issue. This bill package is designed to alleviate the problems with our roads.
The history of this bill package dates back to 2013 with a very interesting plan introduced by State Senator Patrick Colbeck that would supposedly generate $462 million a year for roads. This plan would be financed through selling advertising and naming rights to bridges, offices, and rest area parks across the state. (1)
2013 produced a $483-million-dollar budget surplus. Several legislators advocated that this should be used on roads. (2) Eventually it was decided that $250M of that would be set aside to use on Michigan roads. (3) In May of 2014, the approval to permanently allocate money in Michigan’s general fund for roads and bridges was approved. This brought $450M a year to use for roads and bridges. (4) Road funding was set back in May of 2015 when voters voted no on Proposal 1, which would have approved a 1% sales tax increase to help road funding. (5)
After the voters had spoken, it was back to the drawing board, which led to another innovative idea. State Representative Brandon Dillon proposed the legalization of marijuana as a solution to funding road repairs. State taxes on marijuana sales would go to a road repair fund. This was a promising idea since Colorado had generated more than $75M after legalizing marijuana. (6) This idea did not gain much support.
One of the most interesting parts of how we got to the funding package we have today occurred in 2014. Two very important and controversial competing plans were presented in the House and Senate. The House approved former Speaker Jase Bolger’s plan to remove the sales tax on fuel while raising the gasoline tax, a plan Bolger said would raise an extra $1.2B a year for Michigan roads. (7) Democrats strongly opposed the plan stating it would take millions of dollars from schools and local governments. Representative Sam Singh in particular had strong words saying, “This is a political joke.” (7) Fortunately for the Democrats and those who opposed this plan, it did not make it out of the Senate and never became law.
On the other side, the Senate approved and sent to the House a plan designed to raise more than $1 billion a year in new revenue for Michigan roads. (8) The plan would convert the state’s 19 cent per gallon gas tax to a wholesale tax and gradually increase rates over a four year period, which would lead to taxes surpassing 40 cents by 2018. (8) Snyder praised the efforts of the Senate and supported the plan. This plan eventually died and is what led to the 2015 road-funding package
The 2015 road-funding package addresses many issues regarding Michigan roads. It first amends the Motor Fuel Tax Act by increasing the tax on diesel motor by 4 cents. (9) It will also adjust tax rates based on consumer inflation annually as well as adding provisions to the act related to alternative fuels. (9) The extra funds collected from diesel fuel taxes will be used to help fix Michigan roads.
The bill package also amends the Michigan Vehicle Code by increasing registration tax rates to certain vehicles (9). Rates for average motor vehicles such as cars, trucks, etc. will increase by 20%, beginning January 1, 2017. (10) It will also increase the average registration tax for vehicles from $100 to around $120. (10) Adding an extra twenty dollars to the budget could be extremely helpful in getting the funds needed to fix roads around the state. The bills also add a new registration tax surcharge for electric-powered vehicles. (10) This money was not being collected before and will add additional funds to the road budget.
A large portion of this package will transfer some of the income tax revenue from the General Fund/General Purpose Fund to the Michigan Transportation Fund. (10) This will provide large amounts of additional money for the Michigan Transportation Fund each year. This will begin in FY 2018-19 at 150 million dollars and increase to 600 million dollars for FY 2020-21. This adds funds that had not previously been allocated to repair Michigan roads. The biggest barrier to fixing Michigan’s roads has always been funding. This package of bills will go a long way to solving that problem.
Although not included in this package, there has been much discussion about implementing toll roads in parts of Michigan, which would help earn some additional money to fix roads. Many other states have used revenue from toll roads to repair their roads. Toll roads have never been a popular idea in Michigan, despite their success elsewhere.
Although some may oppose the tax increases in the 2015 Road Funding Package, it provides a means to improve the conditions of Michigan’s roads. It is definitely designed to solve this issue over a long-term period. Consequently, we cannot expect imminent improvement in Michigan roads. However, this package provides a solution where others have failed in the past. Time will tell whether this plan is successful over the long term.
- Timeline for Michigan Road Infrastructure Funding. 2015. http://www.wnem.com/story/30158027/timeline-michigans-rocky-road-to-infrastructure-funding
- Michigan has $483M more than expected this year. 2013. http://www.wnem.com/story/22261685/michigan-has-483m-more-than-expected-this-year
- Snyder plans tax break for more homeowners. 2014. http://www.wnem.com/story/24641580/snyder-plans-tax-break-for-more-homeowners
- Michigan House panels OK $450M for roads. 2014. http://www.wnem.com/story/25453284/house-panel-oks-redirecting-370-million-to-roads
- PA 176 of 2015. Michigan Legislature. 2015. http://www.legislature.mi.gov/documents/2015-2016/publicact/pdf/2015-PA-0176.pdf
- Lawmaker: Legalizing marijuana could fix roads. 2015. http://www.wnem.com/story/29117598/lawmaker-legalizing-marijuana-could-fix-roads
- Michigan House passes Bolger plan to fix roads. 2014. http://www.freep.com/story/news/local/michigan/2014/12/04/bolger-road-funding-plan-schools-cities/19901569/
- Michigan Senate approves gas tax hike for long-term road funding. 2014. http://www.freep.com/story/news/local/michigan/2014/12/04/bolger-road-funding-plan-schools-cities/19901569/
- PA 174 of 2015. Michigan Legislature. 2015. http://www.legislature.mi.gov/documents/2015-2016/publicact/pdf/2015-PA-0174.pdf
(10) PA 179 of 2015. Michigan Legislature. 2015. http://www.legislature.mi.gov/documents/2015-2016/publicact/pdf/2015-PA-0179.pdf