Inside208

Tax policy Committee Takes Testimony on Sales and Use Tax Bills to Fund Roads

Posted on May 1, 2014 by Dene Westbrook

Over the past two days the Tax Policy Committee has taken testimony on bills that would dedicate a portion of the general fund revenue from the sales tax collected at the pump and 1% of the use tax and dedicate that money to roads.

HB 5459 states that after all allocations and distributions are made, this includes the money that is sent to local communities through constitutional revenue sharing, the remaining balance will be used to fund our roads in accordance with percentages described in the transportation funding formula (Act 51). These percentages equal 39.1% to MDOT, 39.1% to County Road Commissions, and 21.8 to Cities and Villages. What this bill does not do is add additional dollars to the Comprehensive Transportation Fund and therefore public transit agencies across this state receive no increase in funding.

HB 5492 states the revenue generated from the use tax must first be reimbursed to the school aid fund and to communities for reimbursement for lost personal property tax revenue. Upon completion of those disbursements 1% shall be deposited into the Michigan Transportation Fund used to fund our roads in accordance with percentages described in the transportation funding formula (Act 51). This bill also does not do add additional dollars to the Comprehensive Transportation Fund resulting in no increase in funding for public transit.

Collectively these two bills will generate and additional $369 million for roads.

The League testified that while these bills preserve current funding and obligations to local communities, we have concerns about the continued dedication of General Fund dollars and the impact that this could have on our cities and villages in the future. The lack of investment in public transit is also an issue that needs to be addressed in these bills. We know that the economic and social benefits of having a great public transit system in Michigan is a key component to building vibrant communities.

These bills fall short of the sustainable long-term funding solution that is needed in Michigan. We will continue to work with members of the legislature to improve these bills and fix Michigan’s transportation needs.

John LaMacchia is a Legislative Associate for the League handling transportation and infrastructure issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

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