House Passes Road Funding Plan

With the legislative quadrant discussions at an impasse, the House decided to take action and passed a $1.2 billion road-funding plan on Wednesday with no guarantees of support from either Senate Majority Leader Arlan Meekhof (R-West Olive) or Governor Rick Snyder. The plan involves $600 million in revenue from a gas tax increase and registration fee increases with $600 million from existing sources. These bills also include an income tax rollback and an expansion of the Homestead Property Tax credit.

Effective 2018, this plan would include a 3.3-cent increase in the overall fuel tax with an additional 4 cents for diesel, bringing it up to the gas tax level effective in 2017. Registration fees would also increase by $400 million total, about $55 additional per vehicle for commercial vehicles and $40 for passenger vehicles.

To offset increases, the amount of the homestead property tax credit available would increase by increasing the income cap to $60,000, with the phase out of the credit starting at $51,000, and increasing the amount of income affected from 3.4 percent to 3.5 percent.

The phase in portion of the plan would generate $400 million for the 2016-17 fiscal year and increase to $1.2 billion for the 2020-21 fiscal year. The General Fund is included in this increase, increasing from $150 million in the 2018-19 fiscal year to $600 million in the final year. The tax credit portion of the plan would start with $40 million in the 2017-18 fiscal year and will increase to $200 million in the 2020-21 fiscal year.

If general fund revenue outpaces inflation, a proposed income tax rollback has also been included. This rollback would begin in 2019. Democrats have criticized this rollback for not including a floor and believe it could strain the General Fund.

The bills passed are include: gasoline tax increase (HB 4614, HB 4616, HB 4738) with a vote of 56-50; vehicle registration fee increases (HB 4736) with a vote of 55-51; competitive bidding bills (HB 4610, HB 4611) and expansion of the Homestead Property Tax Credit (HB 4370) with a vote of 62-44; and concerning warranties (HB 4737) with a vote of 101-5. The income tax rollback passed with a vote of 61-45.

Reaction from businesses was mixed. Business Leaders for Michigan and the Detroit Regional Chamber expressed concerns regarding the use of the General Fund. The Michigan Chamber of Commerce and the National Federation of Independent Business-Michigan supported the package, with the National Federation of Independent Business-Michigan specifically praising the lower reliance on higher taxes and fees than other plans.

The bills now move to the Senate, where Senate Majority Leader Arlan Meekhof (R-West Olive) looks forward to the conversation.

posted by PAA Online , Friday, October 23, 2015 10:50 AM
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