With almost entirely Republican support, a twelve bill package that represents Speaker Cotter’s transportation plan was passed out of the House today and sent to the Senate. The plan would use existing revenue and prioritize future dollars to provide an additional $1.1 billion in funding for roads and bridges and was broken down into the following five categories.
$792 million from the General Fund
$135 million from Reprioritizing Restricted Funds
$117 million from Tax Fairness
$38 Million in New Revenue
Reforms and Efficiencies
General Fund: The $792 million the Speaker proposed will come from prioritizing general fund spending and assumes cuts can be avoided due to expected future growth in revenues. This is phased in over 4 years with $442 million being dedicated in FY 16, $492 million in FY 17, $617 million in FY 18, and $792 million in FY 19. After FY 19 the number will grow by the rate of inflation or 5%, whichever is less.
Reprioritizing Restricted Funds: Of the $135 million, $75 million will come from tobacco settlement dollars currently in the 21st Century Jobs Fund, $60 million from the states tribal gaming compact. These bills gut MEDC funding and potentially many of the programs our members have benefited from.
Tax Fairness: The House eliminated the Earned Income Tax Credit resulting in a $117 million for roads.
New Revenue: $38 million will come from diesel parody (raises tax on diesel to 19 cents and ties it to inflation) and increased fees on electric and hybrid vehicles ($30 increase for hybrids and $100 increase for electric).
Reforms and Efficiencies: The House-passed bills will require competitive bidding on all MDOT and local road projects over $100,000, require MDOT and local road agencies to secure warranties for projects over $2 million, and allow townships contributing greater than 50% to a road project over $50,000 to require competitive bidding.
Other highlights: The current gas tax will remain at 19 cents but will be tied to inflation. All of the new money will be sent to MDOT, counties, cities and villages resulting in no increase for the comprehensive transportation fund.
The proposed package of bills has less than $40 million in new revenue. It neglects to make a much needed investment in transit and jeopardizes economic development funding many of our communities benefit from. This plan also impacts the long-term certainty our communities need to plan, which is one of the key factors to our opposition.
The League firmly believes we must find a sustainable long-term solution to the problem that includes new revenue that is dedicated to the entire transportation system. These bills do not do that. We have offered testimony on multiple occasions explaining our dissatisfaction with this proposal. Our advocacy efforts will continue to focus on a solution that includes new revenue and makes much needed investments in public transit.
We look forward to working with the Senate and are hopeful that this package can be improved significantly.
John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at [email protected] or 517-908-0303.