Michigan House & Senate Road Funding Plans Breakdown

House Road Funding Plan

The House plan, passed in early June, seeks to find a little over $1 billion for roads over the next four years by:

• Dedicates $700 million in General Fund dollars by 2019
  • Capturing future GF growth to roads
  • Must be appropriated annually
• “Tax Fairness”
  • Eliminate Earned Income Tax Credit – $117M
  • Fuel tax parity: electric, hybrid, diesel
• Repurpose Dedicated MEDC Funds
  • Redirect $75M Tobacco Settlement revenue going to 21^st Century Jobs Fund
  • Impacts:
    • Pure Michigan Campaign
    • Business Attraction and Community Revitalization
      • Brownfields, MEGA, Historic Preservation Credits
    • Entrepreneur Eco-system
      • Accelerator Funds, Business Incubators, Entrepreneurial Support Initiatives, Next Energy, University Technology Acceleration
    • Repurpose Dedicated MEDC Funds, cont.
      • Redirect Tribal gaming compact – $60M
      • Redirect Film Subsidies – $50M
    • Warranties/Efficiencies
      • Require MDOT competitive bidding for projects over $100k
      • Require local competitive bidding for projects over $100k
      • Allow townships contributing over 50% to require competitive bidding on projects $50k +
      • Warranties

Senate Road Funding Plan

The Senate plan looks to raise $1.4 billion over the next three years, largely from two different sources:

• Raising the gas tax gradually over the next three years.
  • The gas tax would go up 19 cents to 24 cents on Oct. 1, 2015;
  • to 29 cents on Jan. 1, 2016, raising
  • then to 34 cents on Jan. 1, 2017.

The changes are expected to raise $475 million more for roads in FY 2016; $733 million in FY 2017 and $822.1 million in FY 2018, according the Senate Fiscal Agency (SFA).

It raises the 15-cent diesel tax 7 cents to 22 cents on Oct. 1, 2015, and 7 more cents on Jan. 1, 2016, to 29 cents. It goes to 34 cents on Jan. 1, 2017.

• Increased General Fund allocation.
  • $350 million in FY 2016
  • $700 million special roads allocation starting in FY 2017 and going until FY 2033

Most of the General Fund allocation would come from currently unspecified General Fund budget cuts, with over $100 million coming from the elimination of the state’s Earned Income Tax Credit (EITC).

See how these plans fit with the Chamber Alliance’s 5 Principles for Road Funding.