LANSING — Republicans who control the Michigan House proposed a new transportation-funding plan Wednesday that would not raise fuel taxes but would direct an additional $800 million toward local roads.
The core facet of the proposal is similar to one that was not embraced last year by Democratic Gov. Gretchen Whitmer because of her concerns about negative impacts on other parts of the budget: eliminating the 6% sales tax on fuel over three years and replacing it with an equivalent per-gallon gasoline tax hike.
The school aid fund, which receives much of the sales tax collected at the pump, would remain funded by diverting income tax revenue from the general fund. All of the roughly $800 million from the replacement tax would go to local roads, which GOP lawmakers said is appropriate since Whitmer recently announced $3.5 billion in borrowing to fix state-owned I-, U.S. and M-numbered routes over five years.
Also Wednesday, the Republican-led Senate voted on party lines to give the Legislature the ability to reject any state attempt to issue more than $100 million in transportation bonds. Whitmer would veto that bill if it reaches her desk.
"Michigan has tried bonding for roads, and it has tried raising taxes. Neither has solved the underlying problem, and the new bonding scheme introduced (in January) won't be any different," said House Speaker Lee Chatfield, R-Levering. "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."
The legislation would provide an $800 million boost to the state's $5 billion transportation budget. Whitmer and others have said Michigan permanently needs at least $1.9 billion in additional funding — more if it unwinds a component of a 2015 road-funding law that shifted general funds to roads.
Legislators last year rejected Whitmer's proposed 45-cents-a-gallon fuel tax increase. The State Transportation Commission in January unanimously approved her bonding plan, which she said was crucial to start quickly addressing crumbling infrastructure but not a long-term fix.
The bill sent to the House by the Senate would require the panel to give the Legislature 30 days’ notice of its intent to issue more than $100 million in bonds. Lawmakers would have 30 days to block the borrowing.
"The Michigan people need an affordable solution that fixes the roads and doesn't saddle them down with decades of debt," said Senate Appropriations Committee Chairman Jim Stamas, R-Midland, who called on Whitmer to come to the table to work on a "reasonable long-term plan."
"We acknowledge that bonding has a use, but not as broad a use as how it's currently being intended," said Senate Majority Leader Mike Shirkey R-Clarklake.
Whitmer has long implored GOP leaders to "get serious" and propose viable road-funding solutions. Sen. Curtis Hertel Jr., D-East Lansing, said the bonding-related legislation is "clearly unconstitutional" because the Legislature can only act by presenting bills to the governor.
Whitmer said the State Transportation Commission recognized "we have to move dirt now to protect people in our state and to lock in low (interest) rates. It's a smart thing to do. The Legislature is just figuring out the scope of executive authority and — no surprise — they're trying to take it away. But that's not going to happen."