LANSING ? Michigan House Speaker Jase Bolger’s new plan to raise $1 billion for roads primarily through earmarking all taxes collected on gasoline to go toward roads immediately and predictably came under heavy attack from school and local government leaders because it puts funding for K-12 schools and local government revenue sharing at risk.

Mr. Bolger’s proposal would gradually eliminate the sales tax on gasoline, phasing out 1 percentage point of the 6 percent tax annually for six years. The state would immediately replace its 19-cent per gallon tax on gasoline and 15-cent per gallon tax on diesel with a 7 percent tax on the wholesale price of gasoline.

The move would raise about $1 billion in new revenue for roads, but it also would reduce funding to the beneficiaries of sales tax revenues – schools (the biggest recipient of sales tax monies), local governments, the General Fund, and public transit.

But Mr. Bolger said forecasted growth in the sales tax would cover the lost revenue. According to the House Fiscal Agency, sales tax revenues, forecast to be $7.285 billion in the 2013-14 fiscal year just concluded, will rise by an average of $230 million a year to $7.839 billion in the 2015-16 fiscal year.

Bolger said the plan is using “very modest” projections of sales tax revenue during the next six years. He also said the plan mirrors what the Senate passed in HB 5477 in phasing in a 15.5 percent tax on the wholesale price during four years.

“The sales tax has shown to be a very reliable and ever-growing tax,” Bolger said. “The focus needs to be for state government to make Michigan a better place to find a job by making it a better place to provide a job.”

House Republicans have responded tepidly to the Senate-passed plan that would essentially more than double the existing gasoline tax.

Bolger said this most recent proposal is an ongoing discussion, and he is not ruling out anything, including a vote on the Senate proposal.

“I am … determined to fix the roads,” he said. “We need to find the solution to get to 56, 20 and one. I think this is a proposal that will solve (most) of the problem.”

Bolger said one concern he has about the Senate plan is increasing funds for roads so quickly could lead to inefficiencies and inflation.

He also noted that conversations are continuing to take place on updating warranties, increasing competitive bidding and increasing fines on heavy trucks.

Conceivably, Bolger could pass his new plan in the House without any Democratic support. The proposal would be portrayed as revenue-neutral, and the conservative Americans for Prosperity-Michigan praised the idea.

“The ideas behind this road funding plan are commonsense, responsible concepts that respect Michigan drivers and household budgets. Speaker Bolger’s plan stands in welcome contrast to the massive gas tax hike Senate lawmakers approved earlier this month,” AFP-Michigan Director Scott Hagerstrom said in a statement. “For months now, we’ve heard outrage from citizens across the state when they learn that 40 percent of the taxes paid at the pump are siphoned off for non-road-related programs. We applaud House leaders for listening to citizens and coming up with a proposal that seeks to address citizen concerns.”

But getting support in the Senate, where many Republicans put their necks on the line by voting for a tax increase, would be more problematic. And Governor Rick Snyder’s administration was unenthusiastic.

“The governor’s open to other ideas, but right now he’s hoping that the House will pass what the administration has been advocating for and what the Senate approved,” said Jeff Cranson, spokesperson for the Department of Transportation. “We’ve got to be careful about anything that would take money away from other vital interests like schools and cities.”

And to that point, school officials panned Bolger’s proposal. It would put $725 million to the School Aid Fund at risk, they said.

“Our school superintendents are extremely disappointed in the transportation proposal that’s coming out of the House,” said Brad Biladeau of the Michigan Association of School Administrators. “We can’t support a plan that doesn’t provide a clear path for replacement revenues or pushes the responsibility to a new Legislature.”

Both Biladeau and Don Wotruba of the Michigan Association of School Boards said relying on forecasted revenue growth to replace the lost sales tax revenue is a major concern. And Wotruba said if revenues do in fact grow, schools badly need that money to pay down retirement costs, increase the foundation grant to districts and pay for other desired improvements like meeting the proposed third grade reading requirement.

John LaMacchia of the Michigan Municipal League said the MML firmly supports the Senate-passed plan and has concerns about Bolger’s proposal although it would like to see full details.

“It’s just a plan that shifts money. I would prefer to have something that’s going to be a long-term structural fix for Michigan,” she said. “I don’t like to balance budgets on promises. In the past, sometimes those promises don’t come true.”

Road interests praised Bolger for offering the proposal.

“We’re still really encouraged that people are trying to figure out how to fully fund roads,” said Lance Binoniemi of the Michigan Transportation and Infrastructure Association. “I think the speaker is trying to come up with all potential solutions.”

And Denise Donohue of the County Roads Association of Michigan said her organization will need to see more details on Bolger’s proposal, but also that it is a continuation of the positive energy on the issue.

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