Gretchen Whitmer (credit: WWJ)

Gov. Whitmer Proposes First Budget, Defends 45-Cent Gas Tax Hike

March 05, 2019 - 2:43 pm

LANSING (WWJ/AP) - Speaking before Michigan lawmakers Tuesday, Gov. Gretchen Whitmer presented her plan to fix the roads and fund education -- laying out her first proposed state budget. 

It includes the following:

ROAD REPAIRS - She proposed a 45-cents-a-gallon gasoline and diesel tax increase -- nearly tripling Michigan's per-gallon gas tax. The increase would be phased in between this October and October 2020, raising $2.5 billion more annually for road and bridge work. The governor wants to no longer divert up to $600 million from general funds to the transportation budget, so the net increase in spending for roads would be $1.9 billion.

EDUCATION - She proposed a $500 million boost in state K-12 spending, including extra funding to teach at-risk, special education, and career and technical students.

RETIREMENT TAX - She proposed repealing a 2011 law that eliminated or reduced exemptions from the taxation of pension and other retirement income, saving more than 400,000 families an average of $800 annually.

EARNED INCOME TAX CREDIT -  She proposed doubling the earned income tax credit for low-income earners from 6 percent of the federal credit to 12 percent. It would be phased in over two years, which said would help offset the higher gas tax

"We are a state at the crossroads. If we choose to continue down the path that we're on, our roads are going to get much worse and it's going to cost more to fix them," the governor said. "The goal is 90 percent of our roads at good to fair, which means a spend level of $2.5 billion additional, with $1.5 of those going to state roads."

She claims in past years lawmakers haven't taken the budget seriously.

"Instead of ensuring balance and investment, our predecessors played shell games. They took temporary victories at the cost of long-term security, and selfishly spun the situation while pushing the costs onto us, to our children, and to those who can lease bear them."

"It will not be easy; it won't happy overnight," Whitmer added, "but this budget presents our best opportunity to forget a new path in Michigan."

If the GOP-led Legislature backs Whitmer's plan -- which is a tough sell -- Michigan would have by far the highest fuel taxes in the country.

[State Senator Calls Whitmer's Gas Tax Hike 'Insane,' Pitches Other Plan To Fix The Roads]

The Democrat is coming under criticism from some in the GOP who say she is breaking a "campaign promise" after he once called her Republican gubernatorial opponent's suggestion that she would raise the tax by 20 cents "ridiculous" and "nonsense."

Whitmer said was not always her plan to propose so large of a tax hike, but once she took office she gained a "real appreciation" for how quickly the roads are deteriorating.

She said her campaign pledge was to "fix the damn roads, and this plan does that."

While influential groups such as the Michigan Chamber of Commerce say they are willing to back a gas tax increase to fix the roads, the  top Republican on the House budget committee, Rep. Shane Hernandez, said Whitmer has started the conversation "on the wrong foot" by coming out with a 45-cents-a-gallon increase.

On the same page as Hernandez, Michigan Republican Party Chairman Laura Cox accused the governor of trying to build a better Michigan where "broken promises." She said the gas tax hike, along with proposed  tax increase on over 100,000 small businesses would massively affect the cost of living in the state.

"While our roads may improve, they would simply end up as well paved pathways for jobs and people to leave Michigan," Cox said, in a statement.

The Associated Press contributed to this report.