Bipartisan ex-legislators propose gas tax hike to fix Michigan roads

A road-funding proposal by the new Michigan Consensus Policy Project, a bipartisan group of former state legislative leaders, would raise the state’s regular and diesel gas taxes by 5 cents per year for nine years to raise nearly $2.5 billion for roads.

A bipartisan group of former state legislative leaders says it has a plan to raise more than $2.5 billion to help fix Michigan’s crumbling roads: A nearly 50-cent gas tax increase spread out over nine years.

The tax hike would be doled out over time to lessen the impact on drivers, according to leaders of the new Michigan Consensus Policy Project, which says it aims to provide bipartisan solutions to some of the state’s most pressing problems in an era of divided state  government.

The group maintains that a tax increase of that scale is necessary because the state does not have enough money now to repair its roads, which are among the nation’s worst.

The proposal, released Thursday, is spearheaded by four past state legislative leaders: Ken Sikkema, a Republican former state Senate Majority Leader; Bob Emerson, a Democratic former state Senate Minority Leader and budget director during then-Gov. Jennifer Granholm’s administration; Republican former House Speaker Paul Hillegonds; and former Democratic Lt. Gov. John Cherry, who served alongside Granholm.

Ken Sikkema, a Republican former state Senate Majority Leader; Bob Emerson, a Democratic former state Senate Minority Leader

The effort is a project of The Center for Michigan, a nonprofit, nonpartisan organization of which Bridge Magazine is a part. Phil Power, the center’s founder and chair, serves in an advisory capacity on the project. Bridge’s editorial staff has no role in the Consensus Project and is reporting this article independent of the project and the center.

“The roads are deteriorating even with the amount of money we’re spending,” Sikkema told Bridge in one of several briefings given to media before release of the proposal. “I can’t imagine that’s a good thing for our economy or for residents.”

The former leaders’ proposal could be a hard sell to current Republican legislative leaders, who have said road funding is a priority but are reluctant to raise fuel taxes. Republicans control the state House and Senate.

New Democratic Gov. Gretchen Whitmer, meanwhile, campaigned on fixing the roads through increased road user fees, or asking voters to pass a statewide bond if lawmakers won’t raise fees. She is expected to offer more concrete details about her roads plan during her State of the State address Feb. 12 and in the release of her first budget expected in early March.

Sikkema and Emerson told Bridge they based their proposal on the findings of the 21st Century Infrastructure Commission, appointed by former Republican Gov. Rick Snyder, which estimated in 2016 that the state needed to spend an extra $2.6 billion per year just to maintain the roads and bridges it has today. It’s unclear whether or how much that estimate has increased in the two years since. Sikkema and his colleagues at Lansing-based Public Sector Consultants provided external support to the commission.

The commission estimates were echoed in an independent study by Business Leaders of Michigan in 2017.

Under the Consensus Policy Project proposal, close to $2.5 billion would be raised in total over nine years by increasing the state’s regular and diesel gas taxes by 5 cents per year. The group estimates its proposal would raise $275 million the first year, $550 million in year two and $825 million by the third year, eventually nearing $2.5 billion by year nine.

Another roughly $163 million could be found through a combination of new excise tax revenue on the sale of recreational marijuana by 2023 and legislation in last year’s lame-duck session that will divert more money to roads, to get to the $2.6 billion figure.

Sikkema and Emerson acknowledged it’s possible that the funding need in nine years could be even larger than the $2.6 billion in additional funding researchers have said is needed today, but they contend that the only feasible way to raise the gas tax is in phases.

Sikkema said it would be irresponsible to raise the entire $2.6 billion in a single year, given the cost to consumers and the possibility that an influx of new money could inflate prices for road work.

The project does not address other road-funding issues, including whether bonding or an infrastructure bank also should be used; Sikkema said those are questions policymakers should answer. He said it’s also worth discussing whether it might be better to hike gas taxes more in the first years and taper off in later years to get money into the system sooner.

“We want to jumpstart the conversation about how to raise the money, and clearly it’s not a be-all, end-all (solution),” Sikkema said. “We didn’t pretend that we were going to answer every single issue when it comes to transportation funding. It’s complicated. There are lots of issues involved, obviously. It wasn’t our desire or our capacity to answer every one of them.”

The group’s proposal also calls for raising gas taxes, including for diesel, another 2 cents in the first year, raising about $110 million to create a matching fund for grants or loans to help local governments fix local streets. In future years, that 2-cent increase would effectively be earmarked for that new local matching fund, Sikkema said.

The former legislative leaders said they settled on raising the gas tax because it is collected from people who use the roads, it can be phased in over time, and the idea had unanimous support within the group.

“I think all taxes are bad, but some are necessary,” Sikkema said. “This fits the necessary category.”

Michigan’s regular and diesel fuel taxes have been 26.3 cents per gallon since 2017. Michigan lawmakers voted in 2015 to raise them as part of a larger $1.2 billion funding package that draws half its revenue from higher gas taxes and vehicle registration fees and half from diverted income taxes, though it won’t be fully phased in until 2021.

Both fuel taxes will be linked to inflation starting in 2022 as part of the 2015 legislative deal.

But that package does not generate sufficient funding for roads, according to the state infrastructure commission and Michigan’s transportation leaders, who have said it will slow their decline but not reverse the problem.

The Michigan Department of Transportation last fall said 79 percent of Michigan’s state-maintained roads were in good or fair condition in 2017, down from its goal of 90 percent, a standard last hit in 2010. Without additional investment, that downward trend is expected to continue, according to MDOT.

Senate Majority Leader Mike Shirkey, R-Clarklake, recently told Bridge he wants to wait until the full $1.2 billion is raised by 2021 before considering other funding options.

House Speaker Lee Chatfield, R-Levering, has said the root of the state’s funding problem stems from the fact that Michigan charges a 6-percent sales tax on gasoline purchases, in addition to state fuel taxes, but doesn’t dedicate the sales tax revenue to roads. A spokesman for Chatfield said he wants to discuss the possibility of dedicating the sales tax on gasoline to roads, adding that gas tax and fee hikes, along with bonding, haven’t solved the problem in the past.

Emerson told Bridge that because members of the Consensus Policy Project are former legislators, they understand the political realities of needing to find solutions that can get enough votes in the Legislature. But, he added, too many of those solutions are short-term fixes.

“We basically came back and said, ‘You know, (it’s) not our job to find a political solution to this issue,’” he said. “Our job was to define the problem and to find a reasonable solution.”

Lack of investment in infrastructure has economic costs, including for drivers, who shell out an estimated $686 per year on average in extra costs, including tire and vehicle repairs, according to a 2015 report by TRIP, a Washington, D.C.-based transportation research group.

“That’s a lot of money every year. That’s far more than people would have to pay in a gas tax to fix the roads,” Sikkema said. “People are paying that already.”

A number of funding sources have been floated to pay for roads, from state taxes to toll roads, to assessing fees based on miles driven, which has been tested in Oregon.

In 2015, before then-Gov. Snyder signed the $1.2 billion funding package into law, Michigan voters rejected a complicated ballot proposal that would have raised the state sales tax, removed it from fuel sales and also raised gas taxes. Diverted income taxes also have put pressure on the state’s roughly $10 billion general fund.

Emerson said other options, including using sales and income taxes, are problematic because diverting some money to roads would leave holes in other parts of the state budget. And, Sikkema added, a vehicle-miles-traveled program likely would take years to be widely accepted or adopted.

Their proposal estimates the 7-cent increase in the first year would cost Michigan households between $25.62 and $73.78 a year, depending on household type; that translates into a range of 49 cents to $1.42 per week.

With gas prices currently low, “now would be the time to do it,” Emerson said. “As things go up, people get irritated with the price of gas, but they don't take it out on the tax.”

Sikkema and Emerson acknowledge their revenue projections do not account for automakers’ push toward hybrid and electric vehicles, which use less or no gasoline, or better vehicle fuel economy. Sikkema said future policymakers could adjust the proposal if circumstances changed, but for now “the gas tax, in our view, was the most viable.”

Sikkema and Emerson said they intend their proposal to be the starting point of a broader road-funding discussion, and they welcome other alternatives. They said they have not yet decided what other state issues to dive into following roads. In the meantime, they hope they can stir debate, even if the legislative solution ends up being a good deal different from their proposal.

“I think we've been successful if people react,” Sikkema said. “Even if they criticize it and say, ‘Why?’ then we've had an impact, because I think it forces them to come up with their solution.

“If this isn't the solution, what is it?”

Like what you’re reading in Bridge? Please consider a donation to support our work!

We are a nonprofit Michigan news site focused on issues that impact all citizens. In an era of click bait and biased news, we focus on taking the time to learn both sides of a story before we post it. Bridge stories are always free, but our work costs money. If our journalism helps you understand and love Michigan more, please consider supporting our work. It takes just a moment to donate here.

Pay with VISA Pay with MasterCard Pay with American Express Donate now

Comment Form

Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Comments

Matt Korolden
Thu, 01/31/2019 - 11:30am

Start here... then raise taxes on average Michiganders...

How the state spent $30 million on Flint water crisis attorneys
https://www.mlive.com/expo/news/g66l-2019/01/7ae6ba4bf36357/how-the-stat...

State government gives more tax breaks than it collects for schools and general government

http://www.bridgemi.com/economy/state-government-gives-more-tax-breaks-i...

Projection: Michigan business taxes at a net loss
http://www.detroitnews.com/story/news/politics/2016/05/18/projection-mic...

Lawsuit: State shortchanging locals by $4 billion a year
http://michiganradio.org/post/lawsuit-state-shortchanging-locals-4-billi...

1.6B$ tax breaks: no results
http://www.mlpp.org/report-1-6b-business-tax-cuts-derailed-road-funding-...

$1.B tax error
http://www.mlive.com/lansing-news/index.ssf/2014/11/michigan_supreme_cou...

$6M to reconnect Flint water after EFM screwed it up.

http://www.mlive.com/news/flint/index.ssf/2015/10/how_the_flint_water_cr...

$41M furniture deal for Snyder's cousin
http://www.mlive.com/opinion/index.ssf/2014/04/lon_johnson_snyders_41_mi...

http://www.mlive.com/politics/index.ssf/2014/05/truth_squad_no_foul_on_d...

$1.9M to defend unconstitutional law
http://www.detroitnews.com/story/news/local/oakland-county/2015/10/07/mi...

Don
Fri, 02/01/2019 - 8:57am

Yep! that what happen when people keep election crooks!!! what 12 of Engler a crook, 8 years of grandMOLD a closet republican a crook both gave non bid contracts to Carlo constrution, and 8 years of Snyder the snake A big crook wh poision the city of flint with Dixons<<< agent Orange!!! OUR new Democrated AG needs to take these people to court and get OUR money back from them AND also stop giving the privet schools public schools money!!

SBD
Fri, 02/01/2019 - 11:06am

If approved , Most of the new gas tax money will end up in a general fund just as it did a few years back.

Kevin Grand
Thu, 01/31/2019 - 11:33am

And there is a reason why this is a FORMER group of lawmakers.

The results of Proposal 1 from 2015 should make that point perfectly clear!

Matt
Thu, 01/31/2019 - 12:24pm

Chatfield is right! Sales tax should be restructured, broadened and lowered, not playing favorites for one purchase verses another. This could make room to make sure all taxes on fuel go to the roads where they belong. 50 cents +++ a gallon for a state gas tax is nuts, and will just send anyone within 20 miles of the state line over to IN or OH to fill up!

Ed Haynor
Fri, 02/01/2019 - 1:51pm

It sounds logical that all taxes on fuel go to fix roads, BUT, Michigan’s sales tax on gas, funds in part about 40% of Michigan’s K-12 School Aid Fund (SAF). I don’t have a particular problem with dedicating the entire gas sales tax to fix roads, if and only if, state legislators and governors quit raiding the School Aid Fund to finance other projects.

In the most recent lame duck session, the republican-controlled legislature passed and Gov. Snyder signed into law a plan that redirects about $140 million immediately, which grows to nearly $180 million annually thereafter, from the SAF. They do this by placing new online sales tax revenue into the SAF, as is constitutionally required, then they take an equivalent amount out of the SAF through the back door to pay for environmental protection and road funding. This brings this year’s total loss to the SAF of more than $1 billion dollars, when added to the $908 million already being raided by the legislature from our K-12 classrooms, to finance higher education. And this $1 billion-dollar raid doesn’t include an additional $1 billion coming from the SAF going to fund unaccountable corporate charter schools.

The real problem with fixing roads and fixing schools, lies at the door step of those elected in Lansing, because they have so convoluted Michigan’s overall tax system for at least the last 25 years.

The proposal, released by former legislators Ken Sikkema, Bob Emerson, Paul Hillegonds and John Cherry, is a terrible plan, since all it does is continue the twisted logic former and current legislators have used for years and it also puts an undue financial strain on those at the lower and middle income class who would pay the tax increase they propose at the pump, who can least afford it.

Matt
Fri, 02/01/2019 - 5:33pm

Ed, Id like to see the numbers substantiating this claim the the sales taxes on fuel alone amount to 40% school funding, not to call you a liar but sounds very lopsided relative to total expenditures. The idea of a 50 cent additional tax on fuel isn't the problem, it's that we'd be way out line with neighboring states and creates big incentives for evading it. If we moved towards charging sales taxes on all expenditures we could lower the rate again reducing the incentive to evade it while evening it out. If the objective is to cut CO2 as well as fix roads by charging those who drive more, more with a fuel tax, I see don't any way around it. Saying we can't because that the poor have to spend more of their income on fuel than the wealthy is no different than saying they spend more on food ,rent or clothing, oil changes and car repairs and the definition of disposable income. But also concern for the poor is a big reason we do spend a great deal on public transportation for those living in metro areas as well as providing EITCs which may be appropriate in such a case.

Ed Haynor
Sat, 02/02/2019 - 12:06pm

Matt: Just remember, I said "Michigan’s sales tax on gas, funds in part about 40% of Michigan’s K-12 School Aid Fund (SAF). I got this information at: https://www.michigan.gov/budget/0,4538,7-157-40794-139075--F,00.html. This website shows a pie chart broken down in percentages of where school aid revenues come from. Now this chart doesn't show how much gas sales tax makes up this 40%, but I would assume it's substantial, based on the price of gas and most everyone of adult age drives a car.

A good read on the shell game played by legislators and governors is at: http://www.michiganradio.org/post/report-state-took-45-billion-k-12-fund.... That's why I say that I'm not opposed to dedicating all gas sales tax to roads, but I would never support it, unless state government quits playing their shell game, since in the end at destabilizes public schools.

Another good read on the underfunding of public schools, over the past 25 years can be found at: https://www.grbj.com/articles/89977-study-finds-michigan-schools-underfu....

Matt
Sun, 02/03/2019 - 1:41pm

You are technically correct. You did say gas taxes fund part of the 40%, my mis-interpretation, but this is misleading and not meaningful, you can say the same about any item subject to sales tax. Sales tax on bird seed makes up part of the 40% also, but this fact isn't really helpful in deciding anything. But thank you for the links I will read them.

Ed Haynor
Tue, 02/05/2019 - 12:08pm

You are being very disingenuous for suggesting that I was misleading and not meaningful, since I reported my findings. If I would have been able to report specifically the amount of gas sales tax that goes into the School Aid Fund, I would have reported it. Comparing the sales tax on bird seed to gas sales tax makes a mockery of our discussion. Another point I want to make now in regards to the unaffordability of an increased gas tax on lower/middle income persons, that I first wrote about, is an outstanding article at: https://www.politicscentral.org/price-tag-for-fixing-the-damn-roads-abou....

bobpotocki@comc...
Thu, 01/31/2019 - 12:58pm

Retired Logistics Guy Here.
This started with township control of toll roads became too corrupt.
Then we ran into the railroads who claimed trucks were being subsidized by cheap roads.
After that, the politics of pork barrel democratic road commissions clashed with republican leadership facing funding needs from schools.
So they did a clever thing. They shifted direct road taxes over to general fund and schools. Then lowered taxes on special interests. And ran up deficits.
The fix for the roads is simple:
1. Roads get funded by users
2. Eliminate pork, graft and corruption from design, construction and tax collection process
3. Road user funds go to roads. Not the general fund or anything else.

Don
Fri, 02/01/2019 - 9:03am

And Engler and Grandmold giving NO BID contractes to Carlo construstion,,, OUR ne AG needs to that these two and Carlos estate ( he Dead) to court and get OUR road money back<<< I 696 was built by him with sub standard materal!!

John Q. Public
Thu, 01/31/2019 - 1:00pm

It's always impressive to see how non-partisan and innovative former legislators are after they're no longer in a position to make things happen, That's particularly true of those who WERE in such positions (i.e., majority leaders) for years but spent those years screwing us. Now we're supposed to respect them as elder statesmen.

I know most voters have short memories, but not all of us do.

Jan
Thu, 01/31/2019 - 4:23pm

I drive a Prius and know I don't pay my fair share. I drive the Prius to improve the environment. Saving money is a plus, but not fair. Yet, I don't know how one would add a fee to the license, unless it is tied to mileage driven. Somebody, please, figure it out. We need to fix our roads, not put on short term bandages.

Barb
Sat, 02/02/2019 - 6:37pm

Thanks, Jan. For the sake of the environment, I hope Michigan residents and businesses move in ever greater numbers to electric and hybrid vehicles. A Vehicle Miles Traveled tax appllies to trucks in Illinois and is being tested for cars in Oregon. It's been implemented for trucks in several countries. Having such a system in Michigan could move more responsibility to the heavy vehicles that are most responsible for road deterioration, distribute the burden more fairly among electric and conventional vehicles, and help with tourist attraction since they would have somewhat (assuming that we retain some tax on gasoline and diesel) lower gas taxes.

Crissy
Fri, 02/01/2019 - 8:42am

Sikkema thinks “all taxes are bad.” Isn’t this a guy who was on the taxpayer payroll and now makes his living advising people who are on the taxpayer payroll. Get some integrity, Sikkema, and get your butt out of the public sector...if anyone will have you.

Spinner
Fri, 02/01/2019 - 9:06am

Didn't we already raise the gas tax to fix the roads? What happened to that money?

ButThisTimeItsD...
Wed, 02/13/2019 - 2:30pm

But this time it really will. They promise.

Edson Schaus
Fri, 02/01/2019 - 9:27am

Also remember that 8 years ago, the legislature tried to fund the roads fully with a bunch of bills tied to a referendum that would change the constitution and exempt petroleum products from the sales tax. It was the worst defeat of a referendum in Michigan history with, I think, 95% voting No. So whose fault is it that we are where we are today?

Jeffrey Sillman
Fri, 02/01/2019 - 9:43am

Great bi partisan.... that means we have no hope of escaping the tax machine other than moving away. Michigan already has one of the worst tax burdens in the country. I cant pay anymore. Just when the price starts to come down the greedy politicians poke their
hands out of the hole to snatch more of my hard earned dollars. You have enough money now do your job and manage it correctly. Fix the roads. I bet their will be a nice raise or pension increase to the increased taxes. Thats ok 5 more years and I am out of this state!!!!!!!

Connie
Fri, 02/01/2019 - 10:10am

You would think michigan voters would of learned by now. Michigan tax payers are being taxed to death

JJ
Fri, 02/01/2019 - 11:38am

Michigan has relatively high fuel taxes, above-average sales tax, but relatively low income tax. Increasing the fuel tax by 5 cents for a few years is an excellent idea, both for road repairs, but also to reduce the emission of CO2 and pollutants.

Matt
Fri, 02/01/2019 - 5:39pm

Fairly high property taxes too! Counting states with no income tax we're middle of the pack.

SDB
Fri, 02/01/2019 - 11:02am

Gas Tax money will never be used to fix roads, If approved, most of it will go into a general fund much as it did years back when it was increased.

Charlotte Morton
Fri, 02/01/2019 - 12:25pm

It is good to hear that both parties can work together to solve a problem in Michigan. This needs to be done yesterday.

kathy
Fri, 02/01/2019 - 12:53pm

I don’t know about anyone else but sick and tired of the high cost to live here. Insurance, taxes of all kinds. Now a 47 cent increase over the next 9 years. We have no clue what gas will be a gallon over the next 9 years. This state acts like it has a high salary scale when it doesn’t. We are not New York or California. Most of our friends and family had paycuts years ago and had to adjust. People are just making ends meet and all these people just want to take more of what little there is. Please everyone wake up!! No more increases. Start with decreases in other areas.

kathy
Fri, 02/01/2019 - 12:54pm

I don’t know about anyone else but sick and tired of the high cost to live here. Insurance, taxes of all kinds. Now a 47 cent increase over the next 9 years. We have no clue what gas will be a gallon over the next 9 years. This state acts like it has a high salary scale when it doesn’t. We are not New York or California. Most of our friends and family had paycuts years ago and had to adjust. People are just making ends meet and all these people just want to take more of what little there is. Please everyone wake up!! No more increases. Start with decreases in other areas.

Barb
Sat, 02/02/2019 - 6:27pm

Kathy, I understand your frustration (and that of lot of others), but please take into account that you--and me, and all the other MIchigan resident drivers--are paying over $600/year NOW for tires, alignments, and other repairs to our vehicles caused by the bad roads.

Geoffrey Owen
Fri, 02/01/2019 - 2:48pm

Pushing or shoving? Do we complain about the worst roads in the nation or the highest taxes. The article discusses mathematics without doing any math. Looks like about $50 per driver per month which also looks like about a $0.50 tax per gallon. Not all of this would be an increase since we are paying $0.26 now and more due to kick in. Personally I want to drive on good roads, but I don't want to pay more than neighbor states that already have them, to the South, the East and the West.

Aaron
Fri, 02/01/2019 - 4:23pm

They will never fix the road tax money will be spent some where else or they come back and say they need more to fix the roads, and the roads aren't as bad as they say I live on a gravel road have no problem with that, Just a money grad just to raise gas prices

Dave Henry
Fri, 02/01/2019 - 7:57pm

What about raising the charges for over weight truck loads? I understand that we have some of the lowest charges/fines for over weight loads.

Barry Visel
Sat, 02/02/2019 - 7:02pm

The tax expenditure appendix to the MI Budget describes all sorts of credits, deductions and exemptions that could be eliminated to generate revenue for roads. Just one example...reduce the sales tax rate to 3% but apply it to all purchases would generate more than $1billion/year in new revenue...ongoing. Problems solved! Before I’ll support any new revenue scheme we need to eliminate old schemes, and get back to a simple straight forward tax and spend budget that every 8th grader can understand.

R Madden
Sun, 02/03/2019 - 7:22am

We live in Northern Michigan. A lot of people have to travel long distances for low wages. They can barely afford to go to work let alone provide a living for their families. That is a load that would break the camels back. No just no more taxes.