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.