State Senate rejects sales tax hike for roads

Michigan senators soundly defeated a proposal Wednesday that could have led to a sales tax increase as lawmakers scrambled to try to raise taxes and vehicle registration fees to improve deteriorating roads with one day left before the Legislature adjourns for much of the summer.
AP Wire
Jun 12, 2014

 

The Senate rejected a proposal to ask voters if they support raising the state's 6 percent sales tax to 7 percent and dedicating the extra revenue to transportation. The proposed state constitutional amendment won 14 votes, far short of the 26 needed in the 38-member Senate.

But the Republican-led chamber may vote Wednesday night on doubling Michigan's 19 cents-a-gallon gasoline tax to raise at least $1 billion more annually for transportation, which would require a simple majority vote instead of the two-thirds threshold needed to amend the sales tax.

The bill — linked to a tax reduction for homeowners and renters — would increase the gas tax to roughly 41.5 cents within five years, if fuel prices stay flat. The tax could rise or fall no more than 5 percent in future years to account for any major year-to-year fluctuations in price.

If the gas tax increase wins approval in the Senate, its fate could be uncertain in the House a day before lawmakers plan to break before August's primary election. The House last month passed a more modest $450 million increase in road and bridge spending that mostly diverts money from elsewhere in the budget, yet Senate Minority Leader Gretchen Whitmer, D-East Lansing, said she doubts the Senate would have started to move ahead without assurances its plan could pass in the House.

Michigan spends less per driver on roads than any other state yet also has some of the country's highest taxes at the pump because the sales tax applied to motor fuel mostly goes to schools and local governments under the state constitution. Republican Gov. Rick Snyder has said at least $1.3 billion more per year is needed at a minimum to bring roads up to par or else the system will fall further into disrepair.

Some senators had preferred giving voters opposed to the gas tax hike the option of instead increasing the sales tax in the November election.

"That's what democracy's all about. Let's put the two plans out there, and let's let the citizens of this state make up their own mind," said Sen. Bruce Caswell, R-Hillsdale, one of 13 Republicans to support the sales tax option along with a lone Democrat. Thirteen Republicans and 11 Democrats voted against the measure, with Democrats complaining it would hurt lower-income residents and some in the GOP saying they favor drivers paying at the pump for the roads they use.

Senators narrowly approved legislation to stop, starting in 2016, an automatic drop in license plate fees given to drivers in each of their first three annual plate renewals. After defeating the bill earlier in the day, the Senate amended it so drivers would not retroactively see their fees go up.

"It will not raise the same amount of revenue. However, the automobile owners in the state of Michigan will not see a pop-up in registration fees the next time they go back to the secretary of state and renew their license plates," said Sen. Howard Walker, R-Traverse City.

Senators also rejected a House-approved bill that would raise fees and fines on overweight trucks to help boost transportation funding.

"These are tough votes. No one's excited to vote for a gas tax increase of this magnitude. But I have always said if (Republicans) are willing to work with me on some (tax) relief for people that perhaps we could get to a point where we ... move it forward," said Whitmer, saying half of Democrats and half of Republicans must help pass it in a bipartisan way.

The legislation is tied to bills overwhelmingly approved Wednesday making some homeowners and renters eligible for a $200 million income tax break — a key demand that Democrats wanted in exchange for helping increase taxes. Households earning between $50,000 and $70,000 a year would become eligible for the Homestead Property Tax Credit that now can be claimed by households earning under $50,000. The credit is worth up to $1,200 and is more substantial for seniors and lower-income earners.

Comments

truthhurts

good. Quit wasting money! and quit double dipping!!!

Vladtheimp

"That's what democracy's all about. Let's put the two plans out there, and let's let the citizens of this state make up their own mind," said Sen. Bruce Caswell, R-Hillsdale, one of 13 Republicans to support the sales tax option along with a lone Democrat.

Nice to know that democracy (we are in fact a Constitutional Republic) means we only get two choices, just like our current political system that limits us essentially to two parties, as many comments have noted.

Maybe there are other sources of funds to be considered to paying for roads, like drilling down on welfare and medicaid fraud; like cutting the number of bureaucrats from state government; like having a part-time legislature; like stopping wasteful spending to combat non-existent global warming; like making big trucking pay their fair share, and on and on. Two choices indeed - that's how the politicians control everything.

Lanivan

Agreed (except, of course, for the bit about spending for renewable energy sources). In addition, a combination of any or all of the above along with an increase in the Corporate Tax Rate, cut in half in 2012 to 6%, to 6.25% or 6.50% for five years (now that many large corporations are making record profits) would provide a common sense balance of shared commitment.

Republicans want to double the gas tax, which is already the 5th highest in the country, - which would then tie us with California as #1.

But then we pay our legislators the 2nd highest in the country, right below California, so it's all good.

Straightjacket

Vlad once again exhibiting straight forward logic. Start with reeling in the waste and fraud first before any new taxes. Also just think of the intelligence of the politician referring to the institution he even works in incorrectly, we have a constitutional republic form of government. He must of thought he worked at Arby's instead of Burger King before he got his new job?

jlebrasseur

One again, I actually agree with you. This is starting to get scary.

Like Lani said, renewable energy should still be looked into, BUT wind energy will currently never even break even without the subsides. There has to be a better path to renewables. And I do believe in climate change, and while it may not totally be cause by humans, I am positive that the exhaust from factories, toxic waste dumping, deforestation, oil spills, and other such things are not good for our ecosystem (and I do not understand how anyone can deny that).

The problem with our government lies on both sides of the fence as well as the major corporations that are so entwined in our government that they drive every decision in their favor and not what is best for the people.

Charge the trucks more since they do much more damage to the roads. Crack down on welfare fraud (the clowns across the street from me are perfect examples), but at the same time, do not hurt those who actually need it. Actually spend gas tax on the roads instead of putting in in your pockets or whatever they do with it. Give schools good funding, let the teachers actually teach, like decades passed, instead of ONLY focusing on the multitude of standardized tests that really don't teach a thing.

Oh, and the fact that those in congress are getting paid a TON to sit around and bicker all day, and then take several months out of the year off ticks me off to no end.

skyking007

Of course they did. As long as we are a red State there will be little improvement of roads or Schools. Just tax breaks for the companies and nothing for the people. Sometimes around election time they do throw us a bone to get our vote.

truthhurts

perfect example of greed.

 

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