Republican House Speaker Jase Bolger announced a roads funding plan of at least $450 million in fiscal 2015 and at least $500 million annually by fiscal 2018. The legislation would require warranties on road work to avoid short-term fixes and would change various streams of tax revenue.
Michigan roads actually need $1.2 billion annually, Bolger said, but the proposed changes are better than one-time funding allocations the Legislature has made in recent years. Passing the legislation in time for the summer construction season "won't be easy," he said.
"This will without a doubt receive opposition. There will be plenty who say it's not enough, to which I will say, '20 years of all-or-nothing has gotten pretty much nothing,'" Bolger said.
Road maintenance would be at least partially privatized under a requirement that the state bid out contracts for road work and upkeep. Projects over $5 million would need a five-year warranty, which would require companies to maintain an area of road after building it. All other road work would also need a warranty.
The state's 19 cents-per-gallon tax on unleaded gasoline would be replaced with a 6 percent wholesale tax, which wouldn't increase revenue to start. As inflation pushes up the price of fuel, the state could gradually gain more money to fix roads and bridges.
The 15 cents-per-gallon tax on diesel fuel would also be replaced with a 6 percent wholesale tax, generating an estimated $47 million more next year.
The legislation would allocate some revenue from the existing 6 percent fuel sales tax to roads while preserving money that goes to schools and local governments, Bolger said. That's estimated to generate $130 million next year. The proposal also dedicates 1 percent of the state's use tax revenue to roads, or about $239 million in 2015.
Permit fees for overweight and oversized vehicles would increase, generating roughly $4.5 million next year.
Michigan's main transportation fund is at its lowest level in 30 years when adjusted for inflation, because people are driving less and with more fuel-efficient cars while the 19 cents-per-gallon gas tax is the same as it was 15 years ago. The 15 cents-a-gallon diesel tax was last raised nearly 30 years ago.
Representatives from the Michigan Chamber of Commerce, Michigan Building and Construction Trades Council and Michigan Infrastructure and Transportation Association said they supported Bolger's proposal during a news conference.
Bolger announced the proposal on the same day that counties, cities and towns received $60.9 million from the state to pay for road maintenance costs.
The Legislature allocated $100 million for special road maintenance that Gov. Rick Snyder signed into law last month after a harsh winter. The Michigan Department of Transportation and state counties received $39.1 million each while cities and towns received $21.8 million.
Transportation Director Kirk Steudle said the funds are "badly needed" for the "extremely high costs of plowing, salting and filling potholes this past winter."