House Announces New Plan to Add $500M for Roads Annually

Thursday, April 03, 2014

A new plan from House Speaker Jase BOLGER (R-Marshall) would increase the state’s annual investment in its roadways by at least $500 million annually, according to the Speaker. 

Unveiled today, the plan would do that, in part, by converting the state’s flat gas tax to a tax based on a percentage of the wholesale price and by dedicating some current sales tax and use tax revenue to transportation needs. 

“It’s time to move past one-time money,” Bolger said this afternoon, “and build a long-term plan.” 

And that plan is on the front burner in the House as potholes open up across the state this spring. Bolger said he wants to see the new plan in place by the summer recess. 

Bolger, fellow House Republicans and others interested in the state’s roads unveiled the plan during a press conference in the Capitol today. 

The plan focused on four specific subject areas: increasing efficiencies, improving quality, improving fairness and investing current resources. That’s different from other plans that have focused on tax increases to improve the state’s roads. 

While some groups estimate that the state needs at least $1.5 billion in additional revenue for its roads each year, Bolger’s plan would produce an estimated $500 million. 

It would do that, in part, by repealing the state’s 19-cent per gallon gas tax and replacing it with a 6 percent wholesale tax that can shift with the price of gas. At $3.55 cents per gallon, the change would be revenue neutral, according to the Speaker’s Office. This new rate would include a tax on diesel fuel, which is currently 15 cents per gallon.

If the price goes up, so would the revenue. 

In addition, Bolger’s plan would dedicate available dollars from the state’s sales tax on fuel to roads while “preserving all dollars that currently go to schools and local government.” 

Similarly, the state would dedicate 1 percent of the existing Use Tax to roads while also preserving dollars that go to schools and local government, according to the plan. 

The wholesale gas tax and revenue shifts would bring $379 million in extra revenue for roads, according to the Speaker’s estimates. 

The plan would also require all road work to have warranties, would increase overweight permit fees and would begin the use of new contracting methods, like “performance-based maintenance contracting.” 

Rich STUDLEY, president of the Michigan Chamber of Commerce, spoke out for Bolger’s plan at today’s press conference. Studley said the state simply needs to take action to improve its roads. 

“While we’ve been talking about this issue, every surrounding state has enacted comprehensive plans to fix their roads and retain and create jobs,” Studley said. 

“The time to act is now,” Studley added. 

Likewise, Mike NYSTROM, executive vice president of the Michigan Infrastructure and Transportation Association, also spoke out in support of Bolger’s plan today. But he said the plan would not solve the state’s long-term transportation funding shortfall, which he pegged at $2 billion annually. 

Nystrom said he hoped Bolger’s plan would break the “logjam” in the Legislature on transportation funding and ultimately result in a “comprehensive solution.” 

The new plan comes after House leaders have held weekly bipartisan meetings on the subject for months. 

However, neither Minority Leader Tim GREIMEL (D-Auburn Hills) nor Rep. Marilyn LANE (D-Fraser), the minority vice chair of the House’s transportation committee, were in attendance for today’s press event.

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