LANSING – Michigan faces further economic calamity if it does not significantly boost spending on transportation, contends a report from the state’s Transportation Funding Task Force, which listed a series of proposed tax changes and increases, along with improved government efficiencies, that it said would boost funding on the state’s transport system.
There was no one or two specific proposals recommended by the report to increase transportation funding. The report looked at a wide range of options affecting all significant aspects of state transportation, including aviation, public transit and freight handling along with highway funds.
The report lists at least 17 different options dealing with revenue increases alone, and also includes a series of proposals to increase funding through changes in administrative efficiencies and by experimenting with such proposals as creating toll roads.
A straight-forward increase in fuel taxes – last raised in 1987 – was one option the task force proposed, along with changing the nature of the tax to one where motorists pay a percentage of the price as opposed to a flat rate per gallon. The report also called for increasing registration taxes, as well as requiring motorists who buy a new car pay the higher registration fee for the new vehicle when they transfer their plate.
The only alternative that is not acceptable, said task force co-chair Richard Studley, is doing nothing. And he and task force members appearing at a press conference all expressed hopes that some action could be taken during the lame duck session of the 94th Legislature.
One legislative spokesperson, however, said the “odds were against” getting something done in the last months of the session, though he did not completely preclude action.
“We didn’t get into this situation overnight and we’re not going to get out of it overnight,” Studley said. The report calls for a multi-year implementation of proposals and suggests phasing in some tax increases as a way of reducing the impact on individuals.
The report’s findings and recommendations were agreed to unanimously, Studley and co-chair Dennis Gillow, treasurer of Local 324 of the International Union of Operating Engineers, said. The task force included Democratic and Republican members of the Legislature as well as representatives of business, labor, tourism, transportation organizations and local development groups.
The report’s findings and recommendations were praised by a myriad of groups. Dan Gilmartin, executive director of the Michigan Municipal League, said the proposals would help Michigan’s economy to prosper again, and failure to act on them would ensure the state’s economy would continue to crumble.
Tammy Carnike, chief operating officer of the Detroit Regional Chamber, said the state’s current transportation funding system is not working for either the state or the Detroit region. The report’s proposals are in line with the chamber’s own proposals on promoting aggressive state transportation development, she said.
Some conservative bloggers protested the report as an example of another tax increase that government wanted to impose on the public.
But Studley said the proposals represented an increase in user fees instead of a general tax increase. The idea that the user must pay for the improvement in the system is critical, he said, and not taking steps to improve the state’s transportation system would end up costing more jobs for Michigan.
Sen. Glenn Anderson (D-Westland) said that many currently unemployed persons would find jobs if the state undertook the steps outlined in the report.
Michigan cannot depend on assistance just from the federal government to help meet its financial needs for transportation, Studley said. While Michigan is a donor state in terms of federal funding, and while efforts will continue to boost the amount of money Michigan gets from the federal government, federal highway funds are running short as well.
If the state does nothing to deal with its transportation system it faces the possibility of losing federal monies because it would not have enough money to meet a federal match, Studley said.
Not doing anything could actually cost the state as much as $1.9 billion annually in lost revenues, lost business and lost jobs, the report said.
Among the revenue options the report proposed:
Increasing registration fees by either an ad valorem basis or by a flat rate.
Eliminate current reductions allowed in registration fees.
Eliminate registration discounts for specific industry groups.
Collect increased registration fees when a plate is transferred to a new vehicle.
Either boost the current 19-cents a gallon gas tax by a flat rate (which would raise an estimated $46 million for each penny of increase) or tax fuel on a percentage of the cost instead of by the gallon (which, assuming a per gallon price of $2.30 for gasoline, would raise $103 million for each one percentage point).
Equalize diesel and gasoline tax rates (diesel fuel is now taxed at 15-cents a gallon) which would raise an estimated $10 million for each one-cent. Equalizing the tax rates has been an issue for many legislators for many years.
Increase the state’s sales and use taxes by one percentage point, and dedicate that to transportation. Such an action would require voter approval, but would raise $1.3 billion for transportation.
Dedicate the sales tax charged on fuel to transportation, which would raise $800 million. Michigan is one only a few states that charges both the sales tax and a specific tax on motor fuels. Such a proposal has been made before, but opposed by education groups inasmuch as the sales tax is a basic funding source for K-12 schools.
Redirect all or some of the Natural Resources Trust Fund to transportation. In part, task force members said, this proposal was aimed at looking at every possible revenue source, and mostly the group was looking at possibly using a portion of the increased monies the fund would get.
Allow for local financing and funding options.
The proposal also calls for a number of programs to boost state and local efficiency in using transportation funds, though it also praises the state for efforts made thus far to increase overall efficiency of the funds.
Several members of the task force said they hoped legislative action could begin as early the lame duck session. For example Anderson and Rep. Pam Byrnes (D-Chelsea) said the Legislature could act on proposals to charge increased registration fees when transferring a plate to a new vehicle.
Matt Marsden, spokesperson for Senate Majority Leader Mike Bishop (R-Rochester) did not rule out action in lame duck (saying the caucus would follow the lead of Sen. Jud Gilbert (R-Algonac) who was part of the task force) but that the odds were not good there would be action before the end of the year.
The report and its recommendations are “vast,” Marsden said, and have to be reviewed carefully.
A spokesperson for House Speaker Andy Dillon (D-Redford Twp.) said he was still reviewing the report so he had no comment on the proposals.
Among the proposed alternative changes to the state’s current system is a flat increase in the current fuels tax or convert the tax to percentage of the sales price, changing the state’s registration taxes,
This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com
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