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Whitmer signals likely veto on Michigan gas tax holiday

Whitmer
Michigan Gov. Gretchen Whitmer wants Congress to suspend the federal gas tax. But she isn’t backing a GOP plan to suspend the state gas tax instead. (File photo)

March 18: GOP outraged as Whitmer rejects gas tax holiday, Michigan income tax cut
March 15: Michigan gas tax holiday all but dead. Now, lawmakers eye other options.

LANSING — Michigan Gov. Gretchen Whitmer is urging Congress to suspend the federal gas tax amid a record fuel price surge but signaled Friday she is likely to veto legislation that would suspend the state gas tax instead. 

The Michigan House on Wednesday approved a Republican-sponsored plan to pause the state's $27.2 cents-per-gallon gas tax for six months to limit costs for motorists amid fuel prices that have spiked during Russia’s war against Ukraine.

Sponsor

The Michigan Senate is expected to approve the measure next week, sending it to the governor's desk, where “we need her to use her pen to sign it," Majority Leader Mike Shirkey, R-Clarklake, said Wednesday. 

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But Whitmer appears unlikely to sign the legislation. 

The first-term Democrat, who maintains she is “all in” on targeted tax relief, said Friday she is trying to negotiate a plan with the Legislature that is more narrowly focused on meeting "the needs of people that are really pinched right now."

The state gas tax holiday proposed by Republicans "won't have lived up to any of those things," Whitmer told reporters when asked if she would sign the bill. "So you can draw your own conclusions."

It's the latest front in an election-year tax relief battle in Lansing, where officials are debating how to use roughly $5 billion in remaining federal stimulus funds while trying to craft a balanced budget for the next fiscal year by summer. 

Whitmer has proposed repealing the state's so-called "retirement tax" by reversing tax code changes from 2012 to exempt more senior income from taxation. And she wants to expand the Earned Income Tax Credit for low- and middle-income workers. 

"I think focusing - having a real laser focus on meeting those needs of people that are struggling to keep their heads above water is really important," Whitmer said Friday, noting the state is also beginning to send out $400 auto insurance rebate checks this week. 

"I've reminded the Legislature that we've got to negotiate a budget and get a balanced budget done, and we can also afford to give people some relief. I invited them to the table to start negotiations."

The Republican plan to suspend the state gas tax for six months puts Whitmer in an awkward spot because it could slow her continued push to "fix the damn roads," as the first-term Democrat promised in her 2018 campaign. 

Whitmer in 2019 proposed a 45-cent fuel tax hike to fix the state's crumbling roads, but Republicans refused to support the increase. The governor sidestepped the Legislature to launch a $3.5 billion bond program, borrowing money to rebuild state highways and bridges. 

The GOP fuel tax holiday would cost the state an estimated $725 million in transportation funding, including $255 million for state highways. $225 million for county road commissions and $142 million for local roads, according to the non-partisan House Fiscal Agency.

Republicans say the state could use surplus and stimulus funds to make up for those losses. Michigan is also expected to get nearly $8 billion in additional highway and bridge funding through the federal infrastructure law President Joe Biden signed in November. 

“We have more than enough cash on hand to pay for this, so that’s not really a concern at all,” House Appropriations Chairman Thomas Albert, R-Lowell, said Tuesday after the 63-39 vote. 

Whitmer joined other governors this week in asking Congress to suspend the federal gas tax. President Joe Biden's administration has reportedly "been discussing the merits and potential drawbacks" of a fuel tax pause but has not yet publicly endorsed the push.

Republicans in the Michigan Legislature say the state should not wait on Congress when it could cut fuel taxes on its own. Nine Democrats joined the House GOP in approving the gas tax holiday plan, which is now awaiting a final vote in the Senate.

Sponsor

Separately, legislative Republicans last week sent Whitmer a sweeping $2.5 billion plan to cut individual income taxes, expand senior relief and create a child tax credit.

Because federal law does not allow states to use stimulus funds to pay for tax cuts, that plan could force Michigan officials to cut roughly $1.8 billion in annual spending from other areas of the budget, which topped $63 billion in 2021.  

Whitmer's office has called the GOP income tax plan "fiscally irresponsible" and "unsustainable." But the governor did not say Friday whether she intends to veto the $2.5 billion income tax cut legislation. 

"We've got a process to make sure that we've done all of our due diligence before I sign a bill or veto a bill," she said.

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