House Speaker Jase Bolger’s (R-Marshall) transportation funding plan, which would shift dollars that currently go to local governments, schools, transit, and the general fund to roads, was voted out of the House without a single democratic vote.
The plan relies on projected revenue increases, which supporters say will more than counter-balance the revenue shift. In an attempt to keep local funding at current levels, language was added to the bill that says if state spending on local governments falls below the previous year, the sales tax phase-out would be repealed. The League has very serious concerns and is continuing to express its strong opposition to this plan. Holding communities harmless and not allowing them to benefit from a growing economy by shifting money over to road funding is not the comprehensive solution for which the League is advocating.
Members voted 56-53 for HB 4539, which would phase out the sales tax on gasoline over six years. The bill would remove 1 percent of the 6 percent sales tax each year from 2016 to 2020. HB 5477 would gradually increase the state’s gasoline tax to balance out the drop in the sales tax over that same time period. Eventually, the sales tax on gas would be 0 percent and the state’s new wholesale gasoline tax would be 13.5 percent, resulting in a $1.1 billion increase in Act 51 allocation. This plan also results in a $48 million cut to the Comprehensive Transportation Fund (CTF), which funds public transit, by 2020.
Additionally, all new transportation revenue generated under the plan would go to only the State Trunk Line Fund, counties, cities and villages. The CTF would lose out on another $97 million in new revenue by not allocating the money to the full Act 51 formula. At a time when we should be investing in public transit in Michigan as a way to attract and retain talent, this plan significantly reduces the current investment in public transit.
For the fiscal analysis please click here.
John LaMacchia is a Legislative Associate for the League handling transportation and infrastructure issues. He can be reached at [email protected] or 517-908-0303.