Michigan Lawmakers Propose $800 Million Plan To Fix Local Roads

The bills would eliminate the sales tax on fuel and replace it with a revenue-neutral tax.

WWJ News
March 04, 2020 - 4:48 pm

LANSING, Mich. (WWJ) -- State lawmakers in Michigan have introduced a package of bills to fund more than $800 million in local road repairs throughout the state without raising taxes.

Five bipartisan bills, which were introduced in the State House of Representatives Wednesday, would eliminate the sales tax on fuel and replace it with an equivalent, revenue-neutral tax on fuel that would be solely dedicated to roads, according to Speaker of the House Lee Chatfield's office.

All revenue collected by the replacement tax would be dedicated specifically to local roads, which Chatfield says would "fill a gap left behind" in Gov. Gretchen Whitmer's recently proposed road bonding plan. Whitmer announced in January she is asking the State Transportation Commission to issue state road bonds, which would be financed without an increase at the gas pump. Her plan would add an additional $3.5 billion in road funding and add or expand more than 120 major new road projects.

The newly introduced legislation would generate an estimated $800 million in funding for local roads, which make up more than 90% of roadways throughout the state, according to Chatfield.

"Michigan has tried bonding for roads, and it has tried raising taxes. Neither has solved the underlying problem, and the new bonding scheme introduced last month won’t be any different," Chatfield said in a press release. "We need to make sure the funding we already have is spent correctly before we simply throw more money at the problem and watch it get sucked away into other projects. This reform will finally fix this mistake."

In addition to creating the revenue-neutral replacement tax on fuel, one of the bills also ensures the School Aid Fund would not be harmed by any changes in tax collections due to the reform.

Whitmer's plan, dubbed "Rebuild Michigan," would nearly double the amount of money available to fix state roadways over the next five years than if the state were to wait. The governor says moving projects ahead by four to six years allows the Michigan Department of Transportation to save taxpayers money by avoiding the annual cost of inflation. 

Wednesday's newly introduced legislation comes on the same day that Whitmer vowed legislators would not be able to block her bonding proposal.

The bills were referred to the Appropriations Committee for consideration, according to Chatfield's office. The bills will be officially read during Thursday's legislative session.