Potholes in Bay City January 2014
A car rolls over a pothole on Center Avenue near the intersection with Madison Avenue in Bay City Monday, Jan. 13, 2014. (Yfat Yossifor | The Bay City Times) (Yfat Yossifor | The Bay City Times)

Jonathan Oosting | joosting@mlive.comBy Jonathan Oosting | joosting@mlive.com 
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on April 17, 2014 at 11:56 AM, updated April 24, 2014 at 11:06 AM


The new proposal calls for the following changes, with projected 2015 revenue amounts in parenthesis:• Repeal the 19 cent-per-gallon tax on unleaded gas and 15-cent diesel tax and replace them with 6 percent wholesale taxes. ($47 million from the diesel tax based on $4 per gallon fuel; the unleaded change wouldn’t bring in more money if gas costs $3.55 per gallon.)

• Apply the newly purchased vehicle value immediately upon transferring a license plate. Motorists would have to pay the difference in vehicle registration fees between their old vehicle and new one at the time of the plate transfer instead of waiting until their registration expires. ($20 million)

• Increase the permit fees for overweight and oversized vehicles. ($4.5 million)

• Permanently dedicate a portion of the existing 6 percent sales tax collected on fuel to roads. This would take money that otherwise would have gone to the general fund, but it would not impact money reserved for schools and local governments. ($130 million)

• Permanently dedicate 1 percent of the 6 percent use tax to roads. The use tax is paid mostly by businesses when sales taxes are not charged on out-of-state purchases. ($239 million)

• Send late payment fees from vehicle registration to road funding instead of the general fund budget. ($10 million)

• End special discounts that allow for different vehicle registration fees. For example, farmers get discounts on their farm trucks, but they also receive a discount for passenger vehicles. ($5 million)

Source: Michigan House Speaker Jase Bolger

LANSING, MI — Michigan lawmakers who spent the past three weeks working in their home districts returned to Lansing on Thursday with what they described as clear marching orders: Start fixing the roads already.

If the message from constituents wasn’t loud enough, House Speaker Jase Bolger (R-Marshall) suggested the morning commute should have served as a bumpy reinforcement.

“It’s time we stop talking and start doing” Bolger said in testimony before the House Transportation Committee, where he urged action on a recent proposal that would dedicate an estimated $450 million to Michigan roads and bridges next year and up to $500 million annually by 2018.

“If you drove in this morning, you experienced what our constituents experience. And that is potholes. That is roads that are crumbling.

“While we had a particularly harsh winter, that is not the cause of what we’re facing. It simply highlighted what we’re facing. And that is long-term underinvestment in our infrastructure. Long-term underinvestment in our roads.”

Bolger’s plan, developed through a series of meetings that included House Minority Leader Tim Greimel (D-Auburn Hills), would change the way vehicle fuel is taxed and devote a portion of sales and use tax revenue to Michigan roads. He hopes to win legislative approval by the summer, when lawmakers wrap up work on the fiscal-year 2015 budget.

Even supporters acknowledge the plan would not solve Michigan’s road funding crisis — some estimates peg the need at upwards of $2 billion a year, and Gov. Rick Snyder has called for at least $1.2 billion annually — but they believe it is a politically-feasible step that could lay the groundwork for a comprehensive solution in the future.

“We’re hopeful that by pushing this plan, this will break the logjam on this difficult issue and start the legislative process to a full, comprehensive plan,” said Mike Nystrom, executive vice president of the Michigan Infrastructure and Transportation Association. “However, we feel it’s not enough. This plan puts forward less than a quarter o what we need on an annual basis.”

The nine-bill package would repeal existing fuel excise taxes and institute a 6-percent wholesale tax. Replacing the current 19-cent gas tax would not immediately increase revenue but would allow collections to rise or fall with price, inflation and demand. Replacing the 15-cent diesel tax would increase revenues and match the proposed tax rate paid on unleaded gasoline.

Most of the increased funding — — an estimated $339 million a year, per House Republicans — would be realized by permanently dedicating a portion of sales tax currently collected at the pump, along with a fixed percentage of use tax revenue already collected on out-of-state purchases.

Michigan is among a small handful of states who charge sales tax on fuel purchases. As a result, motorists here already pay more at-pump taxes than those in most other states, but none of that sales tax revenue goes to roads. The sales and use tax proposals seek to maintain dedicated revenue streams for schools and local governments while tapping money that currently goes to the general fund.

Other revenue-boosting bills would authorize MDOT to move forward with public-private partnerships, eliminate registration exemptions for some specialized vehicles, devote late payment feeds to roads and require motorists to pay any registration fee differences when transferring a plate to a new vehicle rather than waiting until they renew.

The plan would also increase permit fees for overweight or oversized vehicles. Michigan has the highest weight limits in the nation but requires trucks to spread their weight over multiple axles in order to reduce road wear. While others have called on the state to lower limits, Bolger said that would simply result in more trucks on the road as companies split their loads between drivers.

Michigan Department of Transportation Director Kirk Steudle agreed. “You’d have two drivers. Two engines. Twice as much emissions and more congestion on the roads,” he said.

Steudle also offered support for various cost-saving proposals designed to expand competitive bidding and performance contracting for road projects at the state and local levels. Townships would be authorized to require competitive bidding by counties if they are providing at least half the funding for any given project.

While lawmakers received the plan with open ears, Rep. Brad Jacobsen (R-Oxford) questioned why it did not address the fact that electric vehicles owners avoid fuel taxes, and state Rep. Gretchen Driskell (D-Saline) suggested a mismatch between increased warranty requirements and a plan that won’t actually provide enough money to improve roads to needed levels.

The House Appropriations Committee on Thursday was set to consider a fiscal-year 2015 budget that includes approximately $245 million in one-time transportation funding in order to realize maximum federal match dollars and fund state and local road projects. Bolger’s plan would make those dollars permanent and add additional resources moving forward.

A comprehensive solution that includes new revenue sources remains — at least for now — elusive. Increased fuel taxes and registration fees, as previously proposed by Snyder, are highly unlikely in an election year, and House Transportation Committee Chairman Wayne Schmidt (Traverse City) said there are no plans for lame-duck action.

“I think this is a great starting point, and I think doing nothing is not an option,” said Rep. Marilyn Lane (D-Fraser), minority vice chair of the committee. “Michigan has, obviously, weather impediments that we can’t control. Salt and water is our worst enemy, but our lack of investment has produced what we have now.”

Jonathan Oosting is a Capitol reporter for MLive Media Group. Email him, find him onFacebook or follow him on Twitter.