LANSING – A plan to raise $1.2 billion for roads through directing all taxes levied on gasoline purchases to transportation and then raising the sales tax from 6 to 7 percent to make whole schools, local governments and the General Fund still has life, one of the top lawmakers on road funding said Thursday.

Sen. John Pappageorge (R-Troy), chair of the Senate Appropriations Transportation Subcommittee, made his comments as the subcommittee approved a 2013-14 budget for the Department of Transportation without the $1.2 billion in new funding Governor Rick Snyder requested.

With no agreement on whether to raise more money and how to do so, Pappageorge said he stuck to a budget based on available revenue.

“I’m not going to put funny money in the budget,” he said.

Pappageorge said he has another version of the budget ready to go if the new funding passes.

“The fact is, I have an S-2, but you can’t look at it yet,” he said of an S-2 substitute. “The S-2 will be ready to go once we resolve the issue of whether we get more money.”

But there has been no public sign of progress toward an agreement on road funding. Mr. Snyder’s proposal to raise vehicle registration fees and hike the gasoline tax from 19 cents per gallon to 33 cents found next to no support in the Legislature.

Senate Majority Leader Randy Richardville (R-Monroe) has pushed for the idea of removing the 6 percent sales tax on fuel, increasing the gasoline tax to 33 or more cents per gallon or setting a new tax based on a percentage of the wholesale price. That would effectively keep the price at the pump the same for motorists yet raise the money sought for roads. Then voters would have to approve a sales tax increase to keep intact funding for schools, local governments and the General Fund, which are the biggest recipients of sales tax revenue.

Pappageorge said this proposal is what he prefers because it would actually mean all taxes paid on gasoline go to the roads, something the public now incorrectly assumes.

As to the perceived lack of momentum for any proposal, Pappageorge said: “I think if you go back through history and look at big-ticket items, none of them happen fast. And this is a big-ticket item. And the budget doesn’t start until 1 October.”

Rep. Wayne Schmidt (R-Traverse City), chair of the House Transportation and Infrastructure Committee, introduced a new bill (HB 4539 ) Thursday in the House on the issue. It would remove the sales tax from fuel.

Besides taking out the $1.1 billion in new revenues Snyder recommended – Pappageorge said improving revenue collections means only $1.1 billion, not $1.2 billion, is needed – the other big change in the subcommittee budget would ensure the state gets its full federal matching funds through extending a law enacted for the current fiscal year earmarking a portion of the sales tax on fuel to roads.

In total, the budget (SB 184 ) contains $3.47 billion in federal, restricted and local funds. That is a 0.9 percent increase from the current year.

On one point, Pappageorge disagreed with Snyder. He said the new revenue, if and when it is authorized, should go through the existing funding formula, not into a new formula Snyder has proposed. The funding formula is a separate issue that should not be mixed into the question of increasing revenue, he said.

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