Michigan governor swats down $400 million roads deal

October 2, 2019

Keith Goble

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Michigan Gov. Gretchen Whitmer acted this week to tamp down a short-term roads deal.

A deal reached in recent days at the Republican-led statehouse was billed to provide a shot in the arm for transportation work. The $400 million budget deal was a far cry from the $2.5 billion initiative the Democratic governor called for the Legislature to approve.

State lawmakers settled on a plan to provide additional road revenue without a tax or fee increase. Specifically, legislators voted along party lines to route $400 million from the state’s general fund to transportation.

The money for the budget year beginning Oct. 1 will be in addition to $450 million from the general fund that a 2015 Michigan law requires to be shifted to the transportation account.

Gov. Whitmer said the short-term roads deal was inadequate.

“This backwards plan to cut funding from our departments to pay for roads is exactly how we got in this mess in the first place, and it won’t do a damn thing to actually solve the problem,” Whitmer said in prepared remarks prior to using her line item veto power.

The governor used her veto power Sept. 30 to make changes to the budget proposal. As a result, she trimmed the road funding deal from $400 million to $25 million.

Whitmer said she hopes her action will spur Republicans at the statehouse to come back to the negotiation table to get a substantial fuel tax increase approved.

A long road

Early this year, the Democratic governor called on state lawmakers to come up with a long-term transportation funding plan.

The state now collects a 26.3-cent tax on fuel purchases. Revenue is divvied between the state DOT (39%), county roads (39%), and cities (22%). The state also charges a 6% sales tax on fuel purchases.

Whitmer champions a 45-cent increase to the state’s fuel tax rate. Her planned increase would come in three 15-cent installments every six months. When fully implemented, the state’s tax rate would become the nation’s largest at 71.3 cents.

Nearly three-quarters of the anticipated $1.5 billion in new revenue would be applied to state roads. The remaining amount would go to local roads.

Michigan last raised the fuel tax rate in 2015 by 7.3 cents.

Republicans at the statehouse have said the governor’s plan is “a nonstarter,” and that instead they want to rely on existing revenues to help eat into the state’s road and bridge funding needs.

Keith Goble

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.