House Bill Package Looks to Find $800 Million Annually to Fix Local Roads Without Tax Hike

by Scott McClallen

 

A House bill package seeks to put about $800 million annually into local roads without a 45-cent gas tax hike or increasing future debt.

The six-bill package, if enacted, would eliminate the six percent sales tax on fuel over three years and replace it with another excise tax that would fund the 92 percent of local roads that aren’t touched by Gov. Gretchen Whitmer’s $3.5 billion bonding plan.

Much of that bonding money would go to repair roads in Metro Detroit.

Rep. Shane Hernandez (R- Port Huron) sponsored House Bills 5582 and 5583, which along with HB 5584, from Rep. Sara Cambensy (D-Marquette) seeks to eliminate the sales tax on fuel over three years.

Hernandez said he didn’t want to increase taxes or debt.

“We should address roads in a way that works for the entire state of Michigan – not just certain parts of it,” Hernandez said in a statement. “This solution would provide more resources for rural communities and local roads, not just major highways and big cities.

The money from the sales tax that flows into the school aid fund, about $600 million this year, would instead be pulled from the general fund.

HBs 5585 and 5586, introduced by Rep. Jack O’Malley (R- Lake Ann) aims to form a revenue-neutral replacement tax on fuel and would seek to ensure the school aid fund isn’t harmed financially from the change.

“The bill protects school funding and commits to our children’s future. Roads, schools and other essential services remain our top priorities,” O’Malley said in a statement.

“But to continue investing in these priorities, we need to look for efficiencies and make tough spending decisions just like Michigan families have to do every single day with their own budgets.”

HB 5587, introduced by Republican state Rep. Mike Mueller of Linden, looks to funnel total revenue collected from the replacement tax to county, city and village roads.

Speaker Lee Chatfield (R-Levering) supported the package.

“Michigan has tried bonding for roads, and it has tried raising taxes. Neither has solved the underlying problem, and the new bonding scheme introduced last month won’t be any different,” Chatfield said in a statement. “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.”

Eric Lupher, president of the Citizens Research Council of Michigan, told The Center Square the plan is “a good start.”

“It doesn’t begin to get us near where we need to be in terms of total funding,” Lupher said. “But we have to have things to react to, and there has to be give and take.”

Local governments also receive money from the sales tax through state revenue sharing, and that funding replacement hasn’t been addressed, Lupher said.

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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square.