Michigan’s Road Funding Agreement – The Breakdown

The road funding package agreed to and passed by the House and Senate late last night during the final day of the legislature’s lame duck session is essentially a three-step process.

Step One –

1. Legislature Approves Ballot Proposal
   1. Raise rates on sales & use tax to 7%
   2. Eliminate sales tax on motor fuels
   3. Remove higher-Ed from School Aid Fund
   4. Amend use tax distribution
2. Passes Mainstreet Fairness – $60 M
3. School Adequacy Study

Step Two – Legislature Approves Additional Bills Effective ONLY If Ballot Proposal is Approved by Voters

1. Wholesale tax on motor fuel – $1.2 B
2. Registration Changes – $95 M
   1. $45 M in vehicle registrations
   2. $50 M Heavy Truck registrations
3. Transportation related reforms – warranties, competitive bidding
4. Earned Income Tax Credit restoration (tax year 2016) – $260 M

Step Three – Ballot Proposal – May 2015

1. Increase General Sales/Use tax from 6% to 7% (+$1.34 B)
2. Eliminate Sales Tax on Motor Fuels (-$752 M)
3. Removes Higher-Ed from School Aid Fund
4. Dedicates portion of use tax for school aid
5. Activates laws approved by legislature in step two

Here is a breakdown on how the reported revenue would be dispersed:

• $1.2 billion for roads;
• $112 million for public transit and rail;
• $300 million to schools;
• $94 million to local units of government;
• $260 million toward fully restoring the Earned Income Tax Credit for low-wage workers.