LANSING – Re-evaluation of certain
tax credits, most notably housing credits, as well as a review of some $20
billion in restricted revenue, are among the key pieces of House Speaker
Kevin Cotter‘s plan for road funding after voters on Tuesday soundly
rejected a ballot proposal aimed at raising new revenue for roads.
“We have roughly $20 billion of
annual state spending that is restricted spending, and if you go back to the
House action plan, one of the things we listed then was let’s have a complete
re-evaluation of all restricted spending,” Cotter (R-Mount Pleasant) said
of the loose details of his road funding plan he presented to reporters
Wednesday morning. “Restricted spending means it’s statutorily protected,
but we are the body that can re-prioritize that type of spending, and that’s
what we’ll be looking to do.”
Cotter disagreed with the
implication that Tuesday’s defeat of Proposal
15-1 was a mandate against tax increases for roads, saying the take-away
should instead be that a funding solution doesn’t all come from new revenue.
“I don’t know that the results
say there can’t be any, (but) the plan that I’m putting forward is going to be
very heavily dependent on existing revenue,” Cotter said.
In terms of specific categories of
restricted revenue that he might be looking at, Cotter did not divulge many
details, only saying that considerable restricted revenue goes to areas such as
economic development, and “I would say that roads are economic development,”
he said.
He also did not detail much about
his ideas as they relate to one of his primary pillars of tax fairness in the
new plan. A handout at his press conference states “the income tax code
contains several subjective and arbitrary credits and exemptions,” and
those “carve-outs” often force the state to cut checks with taxpayer
dollars. He said he wants to review with his caucus what the purpose is of a
certain tax credit and if, for example, it zeroes out tax liability or simply
results in a check being issued from the state.
“So we’re going to be looking
at that – most notably housing credits,” he said.
Also among his core pillars for a
new road funding plan is ensuring quality work by including such things as
warranties and competitive bidding.
“With warranties, we need to
not only make them more broad in the projects to which they apply, but we also
need to do a better job of enforcement of warranties,” Cotter said.
Asked about the so-called Bolger
Plan from last term presented by former Speaker Jase Bolger that sought to
phase out sales taxes on fuel while simultaneously phasing in a higher fuel
tax, Cotter said the plan that he puts
forward will not be that plan, though he remains open to other ideas.
Senate Majority
Leader Arlan Meekhof (R-West Olive) has dismissed the plan as an
alternative, and Governor
Rick Snyder also has rejected it, primarily because it would pull $800
million away from schools and local governments. The plan relies on forecasted
growth in the sales tax to ensure no cuts to schools or local governments, but
even if that forecast held up, it would mean flat funding for six years.
“I’m going to present a plan to
the caucus and then listen and see and know the other ideas out there.
Ultimately this isn’t just about getting a plan out of the House,” he
said. “At the end of the day, what I’m interested in is we get support
from members of the Senate and the governor.”
And while the sales tax was viewed
as the best source for new revenue, “I think that would be nearly
impossible (to pass) even if we wanted to go that route because we’d be
redecorating the tree in an effort to get it on the ballot,” he said.
But Cotter did say there were some
things he would not be interested in or that would not help the situation.
While he is not interested in a plan that is all new revenue, he is not tossing
out the idea of trying to find a way to generate some new revenue, he said. And
he is not interested in a plan that would just cut “‘X’ percentage across
all General Fund spending” or something of that nature, he said.
“We need to be thoughtful. We
need to be careful. Something of this nature, this is not something where you
just make a decision and this all goes away. This is something we’re going to
live with for, my hope is, decades,” Cotter said. “If we get it
right, this could be our road funding solution for decades, especially to the
extent we account for inflation.”
A rewrite of PA 51 of 1951 would
also not be productive, Cotter said, as it generally ends up resulting in
people walking away from the table.
“There you get into the debate
of do the rural areas get enough money, do the urban areas get enough money,
and I don’t think that’s productive at this point,” he said.
And although some have bandied about
the option, Cotter said he did not see an intersection of passing a prevailing
wage repeal and tying it to infrastructure funding, because, “while there
are some huge savings that can be realized, not a lot of those savings come
directly to road projects,” he said.
Cotter, in response to a question,
said he would absolutely be willing to work through the summer on a solution,
but also wants to see what can get done in the two months before the next
legislative recess.
“With the revenue estimating
conferences coming up, we’ll get refined numbers as to where we stand right
now, so we can certainly look at any additional money that’s available, getting
it to roads, but we can also look at making some adjustments to the budget we
just recently passed,” Cotter said. “There’s going to be no down
time. Road funding is a priority and we will remain diligent until we have a
stable, long-term funding source of revenue.”
HOUSE DEMOCRATS: House Democrats offered their own “guiding
principles” for a new road funding plan, but first criticized House
Republicans for not having session. Democrats checked in for attendance at 1:30
p.m. when session was scheduled to begin, but without a quorum, session
immediately adjourned.
Some Republicans, like Cotter,
attended the Tulip Time Festival in Holland.
“Today, there will be no votes,
no attendance taken and essentially no work done to get us closer to solve the
roads crisis,” House Minority
Leader Tim Greimel (D-Auburn Hills) said. “Instead, Republicans have
been given a hall pass so they can enjoy the Tulip Time Festival. If that
sounds ridiculous, there is a good reason for that. It is ridiculous.
Republicans have chosen to tip toe through the tulips rather than getting back
to work.”
Gideon D’Assandro, spokesperson for Cotter,
said it shouldn’t look bad to voters that session was not held on Wednesday. He
said committees met earlier in the day, and many Republican members were in
Lansing, with some on the chamber floor or in the caucus room. And the speaker
was in Lansing “bright and early” to outline his roads plan, he said.
Greimel also criticized Cotter’s
plan to use some reserved funds for roads as not a permanent solution, but D’Assandro
said those funds come in each year and it would be a long-term solution.
Among the guiding principles for
House Democrats, Greimel said, was that the solution ensure corporations should
pay a “fair share” (though he did not offer specifics on what that
meant), and police, fire, schools and health care should not be cut. The plan
should also be comprehensive and long-term, he said.
“No more Band-Aid
solutions,” Greimel said.
Greimel charged that the reason
voters rejected Proposal 1 was because middle-class families and seniors have
already sacrificed enough.
“Right now Republicans have
allowed corporations to pay the lowest or close to the lowest tax burden of any
state in the country,” Greimel said. “That was facilitated by forcing
individuals, families and seniors to pay more. That’s wrong, the people of
the state know it’s wrong, and that is a big reason for skepticism for Proposal
1.”
Marilyn Lane (D-Fraser), minority vice chair of the House Transportation
and Infrastructure Committee, said in the short term, some emergency measure
should be approved. She said that could include lowering the weight limits on
trucks to preserve pavement and providing relief to drivers by passing a bill
waiving deductibles for pothole damage on cars while prohibiting rates to
increase because of that damage.
Lane also rejected the idea that the
roads could be fixed with mostly existing revenues. She said efficiencies can
always be found, but if the funds existing the problem would be solved by now.
“I think Governor Engler was
clear, I think Governor Granholm was clear and I think Governor Snyder has been
very clear – we need new revenue,” she said. “I think once you can
address what the problem is, you can get to the fix.”
Meanwhile, Rep.
Peter Pettalia (R-Presque Isle), chair of the House Transportation
Committee, said in a statement he told members to “pack their sleeping
bags” during the coming weeks as they work to craft a new solution (though
Pettalia did not specifically mention raising new revenue).
“There are lots of ideas being
thrown around, and through the committee process we want to develop those that
best meet what the citizens have asked for in squeezing the budget from within
first,” he said. “That could mean taking a look through the
legislative process at reclassifying currently restricted or undedicated monies
that we could bring forth to fix roads, along with any other options brought
before us.”
Jeff Farrington (R-Utica), chair of the House Tax Policy Committee, also
said some new revenue is needed. He also said he is confident the House can get
a package including new revenue passed.
“You don’t need 56 just on our
side,” he said. “If the Democrats don’t play political games with it,
and they just vote up or down on if they think they need to provide revenue for
roads, then it will (pass). If they try to tack on EITC and other issues that
have nothing to do with roads, if they want to play political gamesmanship – then no, it won’t.”
This story was published with
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