LANSING ? Michigan House Republicans unveiled Thursday a plan to appropriate at least $450 million in 2015 on roads, but acknowledged that some of the provisions leave the General Fund “tight,” and that has some people concerned.
House Speaker Jase Bolger (R-Marshall) proposed taking the portion of the sales tax that now goes to the General Fund from fuel sales as well as a piece of use tax revenues as part of an overall plan to generate $450 million for roads in 2015 without raising taxes, an amount he said would rise to $500 million by 2018. It is short of the $1.2 billion Governor Rick Snyder and several studies have urged, but Bolger said it is a good start.
The other proposals include ending the 19 cents per gallon tax on gasoline and 15 cents per gallon tax on diesel fuel and replacing them with a 6 percent tax on the price of fuel at the wholesale level. Bolger said this would be a revenue-neutral change for gasoline and raise $47 million in new revenue from those buying diesel fuel.
The proposal also would permanently dedicate one-sixth of the revenue generated by the 6 percent use tax to roads.
It dedicates all available revenue from the existing 6 percent sales tax collected on gas and diesel to roads, which attempts to preserve money currently dedicated to schools and locals within that tax. The sales tax is more than 80 percent spoken for already through the Constitution, and the rest goes to the General Fund.
And the use of the General Fund revenue for infrastructure includes that and possibly some $133 million House appropriations subcommittees have trimmed from Snyder’s 2014-15 budget recommendation awaiting action in the full House Appropriations Committee.
Ari Adler, spokesperson for Bolger said: “I don’t think you can make a direct correlation. But we are budgeting appropriately to be able to handle the change in road funding.”
And that reliance upon unspoken-for General Fund dollars – two-thirds of use tax revenues go to the General Fund – has caused concerns.
“We want to make sure we’re not robbing Peter to pay Paul,” said Amber McCann, spokesperson for Senate Majority Leader Randy Richardville (R-Monroe). She commended Mr. Bolger’s first step in the process, and said the Senate would be interested in reviewing it, but could not speak to the level of support by the caucus just yet – many of whom have yet to review the full details.
And John LaMacchia, legislative associate for the Michigan Municipal League, said the League is also concerned about the impact of the proposal’s details on other sources – especially local government – which receive a portion of the sales tax currently.
LaMacchia said the League is “appreciative of efforts” by Bolger to make road funding a priority, but aside from the General Fund issue, generating $500 million annually to put toward infrastructure still “falls far short” of the need. He said the League, and others, have proposed an increase in gas taxes instead.
“We understand that’s a hard conversation to have, but at the end of the day, you’re not going to solve this by doing something small,” he said. “You have to go after the bigger picture.”
And McCann said, “I think you’d be hard-pressed to find a billion dollars just laying around.” But asked if the caucus would support finding new revenue (likely by increasing taxes), she said, “We’re not known for our lust of tax increases.”
Other provisions of the plan include increased efficiency measures, such as increasing competitive bidding for local road agencies and requiring the Department of Transportation to competitively bid out administration of an entire service region. The proposal also would allow townships to require competitive bids for projects if the township contributes 50 percent or more to the cost.
Judy Allen, director of legislative affairs for the Michigan Townships Association, said the association was still working through the details of the plan, but is very much in support of the competitive bidding aspects, as well as Bolger’s statement on preserving dollars for local governments.
“It’s a great start on a bigger issue,” Allen said.
The plan also would require all projects more than $5 million to have a minimum five-year warranty, and requiring all road work to have warranties of an appropriate length.
Transportation spokesperson Jeff Cranson said the department currently has two-or-three-year performance warranties on bridge painting projects and capital preventative maintenance surface treatment projects. On pavement projects that involve major rehabilitation and multiple course overlays on high-volume roads and major road rebuilds, the department has a five-year materials and workmanship warranty.
Warranty bond providers will not offer products that extend beyond five years, and some have indicated they may reduce their bond products from five to three years, he said.
“Overall, we support the speaker’s ideas to hold contractors more accountable for their work,” Cranson said. “By doing so, we expect to see greater quality.”
Bolger’s plan would also try to begin use of different contracting methods, like performance-based maintenance contracting for state and local roads. Cranson said the department has a “small number” of performance-based contracts in its Metro Region, including the city of Pontiac.
Other provisions of the proposal include:
? Dedicating late payment fees to road funding;
? Simplifying vehicle registration code “by ending special deals”;
? Applying newly purchased vehicle value immediately upon transferring plate; and
? Increasing overweight and oversized permit fees.
Despite concerns by some about certain provisions of the proposal, others welcomed it.
Rep. Wayne Schmidt (R-Traverse City), chair of the House Transportation and Infrastructure Committee, joined Bolger at the news conference and said the plan develops a “good starting point” for a long-term plan.
Mike Nystrom, executive vice president of the Michigan Infrastructure and Transportation Association, agreed.
“Michigan ranks dead last in per capita spending on its roads and bridges, while other Midwest states are recognizing the importance of investing in their infrastructure. Recently, for example, Pennsylvania passed a comprehensive, long-term investment package that equates to an additional $2.4 billion annually,” Nystrom said. “This is the type of solution that Michigan needs. A true, long-term fix is a win for Michigan, our economy and the safety of our citizens.”
And Denise Donahue, director of the County Road Association of Michigan, said the group is “pleased to see this issue moved off dead center.”
“Obviously details of the plan are yet to be fleshed out, but we are thrilled with this bipartisan first step,” Donohue said. “Increased investment from Lansing will help county road agencies better serve Michigan residents who are experiencing real damage to their vehicles caused by our crumbling road system.”
Katie Carey, spokesperson for House Minority Leader Tim Greimel (D-Auburn Hills), said, “I think that some of the elements outlined definitely make sense and we feel as though that’s a good start.”
Ari Adler, spokesperson for Bolger, said Greimel and Rep. Marilyn Lane (D-Fraser), the minority vice chair on the Transportation committee, were invited to attend the event, but neither were there. Asked why Greimel was not there, Carey said the leader wants to fully review the proposal and show it to others in the caucus before taking a stand that he or any part of the caucus is 100 percent in support of the plan.
And Rich Studley, president of the Michigan Chamber of Commerce, also spoke in support of the proposal at the news conference. He said the last time the Legislature did something in support of more road funding in 1997, “not a single lawmaker failed to be re-elected.”
“This is a difficult and complicated issue in some ways, but in other ways, it’s really pretty straightforward. …Bad roads shift costs to Michigan’s motorists and working families,” Mr. Studley said. “There is a window of opportunity to move forward on this issue. The time to act is now.”
Bolger said some of the ideas presented in the proposal are already assigned to introduced bills (in both chambers), while others are not.
“It’s my hope … to have a solution in place before summer recess,” Bolger said.
This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com
