Why Michigan's gas taxes are so high, yet roads so poor
Jul 21, 2015 at 3:00 PM
Michigan drivers pay almost 11 cents more than the national average, but only a fraction of that money goes into a fund for maintaining state and local roads.
More than two-thirds of the money paid in taxes at the pump either goes to schools, the federal government, local counties and cities or public transit.
Just 17.2 cents of the total per-gallon tax collection is set aside for construction and maintenance of Michigan's roads and bridges. And because the state-levied gas tax is a flat 19 cents per gallon, revenues aren't increasing as gas prices rise.
"People are driving fewer miles, they're driving more fuel-efficient vehicles and as the fuel tax is per gallon, it doesn't matter that fuel prices have risen, the same amount of money per gallon is being raised for transportation," said James Lake, a spokesman for the Michigan Department of Transportation.
The focus is on Michigan lawmakers to agree on a solution as debate centers around whether to raise or restructure gas taxes and how much of that revenue is put into roads.
To better understand why you're paying so much and getting so little, state officials said it's important to note that the overall per-gallon gas tax total is divided into three categories: state excise tax, federal excise tax and state sales tax. The state excise tax is 19 cents per gallon, while the federal excise tax is 18.4 cents per gallon. On top of that, consumers are also paying 6 percent sales tax on the purchase.
In Minnesota, the state House of Representatives released a report in July that showed Michigan is one of just eight states where sales tax is levied on gas purchases. The others are: California, Florida, Georgia, Hawaii, Illinois, Indiana and New York.
Michigan, as well as Indiana, New York, Illinois, Hawaii and California, occupy six of the top seven positions on a list of the highest total gas taxes.
In June, the Michigan legislature agreed to shift a small portion of sales tax collected on gas purchases to roads, but that measure awaits approval of a larger transportation funding plan this fall. Some lawmakers representing Northern Michigan believe shifting more of that sales tax money into the transportation fund will be part of the eventual solution, while others have indicated support for increased gas taxes.
Michigan isn't the only Great Lakes state with high fuel taxes, but the others don't have nearly the same problem with funding their road maintenance. Drivers in Wisconsin, Illinois and Indiana all pay more than 51 cents per gallon in taxes, according to the American Petroleum Institute report.
Yet, according to state transportation officials, Michigan invests $154 per person into roads while those other states — Illinois ($412), Wisconsin ($302) and Indiana ($289) — far outpace Michigan’s spending.
Aside from gas taxes, the state's transportation fund also pulls in money from vehicle registration fees and receives federal fuel tax dollars.
Lake said state transportation officials split their money between preventive maintenance projects and reconstruction and rehabilitation efforts. The maintenance money is, as it would suggest, dedicated to keeping roads from getting any worse. The longer roads in good and fair condition are ignored, Lake said, the more expensive they become to maintain.
For that reason, Lake said, you might see crews working on a road that looks to be in much better condition while, for instance, a portion of U.S. 31 near Levering that is considered by many to be one of the worst stretches of a major roadway in Michigan isn't slated for repair until 2018.
"It's similar to changing the oil in your car to make sure you get the maximum life out of the engine," he said. "These are relatively short-term fixes designed to seal the roadway from water infiltration and sealing cracks."
But in most counties, much of the road commissions’ budgets go toward maintenance efforts, which include snow plowing, grass mowing, sign repair, tree trimming and brush removal.
"As far as the road commission having money for paving and that type of stuff, we don't," said Pat Harmon, the Charlevoix County Road Commission's manager. "Most of our money goes to plowing snow. A third of the budget goes out the window in the winter, more than that this last year."
By Craig Currier