LANSING – An amended version of SB 351 would allow Michigan to use a portion of the sales tax collected on gasoline and diesel fuel to obtain matching federal highway funds and devote money to state and local roads.

In its original form, the bill would have siphoned off the portion of the 6 percent sales tax on motor fuels not constitutionally earmarked for the School Aid Fund at the expense of cities, counties, townships and villages, which receive road funds through the Revenue Sharing Act.

The rationale of Sen. John Proos (R-St. Joseph), the bill sponsor, was that if enough money were deposited in the State Trunkline Fund, Michigan would qualify for millions of dollars of federal transportation dollars money it heretofore wasn’t able to receive.

After reevaluating the situation and applying PA 51 of 1951 – the Michigan Transportation Fund law – while taking into account a reduction in the number of federal dollars that will be available, Proos submitted a substitute to SB 351, which was reported unanimously by the Senate Transportation Committee on Tuesday.

The School Aid Fund will still receive the mandatory 2 percent off the top of the 6 percent sales tax charged on motor fuels just as it does from all sales taxes.

And, the amended bill would still allocate 60 percent of the bottom of the 4 percent to the School Aid Fund and 15 percent to the Revenue Sharing Act just as it does for all sales tax.

However, it would change General Tax Act so that another 18 percent of the remaining 4 percent be distributed to the Trunkline Fund, county road commissions and cities and villages for local highway, road and street projects, per the distribution schedule in PA 51.

Using the figure of $3.50 per gallon of gas, Proos said, the 39.1 percent allocated to the Trunkline Fund would result in about $50 million for state roadways, with the same amount going to the counties. Cities and villages would get 21.8 percent, or about $28 million.

“That gives you that round number of $128 million, but it’s probably significantly more these days because of the $4 average, or so, we’re all paying at the pump right now,” Proos said. “Those monies are currently going to the general fund. There will be an argument that says the general fund now has a greater pressure on it, but I would say the goal of this is to eliminate this constant battle back and forth on whether or not we have federal match.

“The answer is we do, and in fact it’s contained already in the user fees we pay at the pump. This is not touching schools or anything else. It’s taking what now is a general fund contribution and uses Public Act 51.”

Proos said that with all the monies included under PA 51, “we will be leveraging a whole lot of both state and local federal transportation dollars from the federal government.”

Sen. John Gleason (D-Flushing) applauded the legislation.

“I think it’s the right route to take, using the formula,” Gleason said. “We’re well-accustomed to using that instrument, so I think it’s the right action to take. It’s not always easy to alter our thoughts and our legislation, but I think it’s the right move.”

The Michigan Municipal League and the Michigan Infrastructure and Transportation Association indicated support for the bill.

However, the Department of Transportation came out in opposition of the bill.

Kelly Bartlett, of MDOT, said the department typically would have taken a neutral stance.

But Governor Rick Snyder plans to make a major announcement regarding infrastructure in the fall and he “wants to have his options open if he wanted to address something of this nature at that time,” Bartlett said.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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