Ex-Michigan legislators want to triple gas tax to fix roads

Potholes in downtown Lansing | Susan J. Demas
Updated at 5:50 p.m. with Senate Majority Leader Shirkey’s comment

A bipartisan group of former Michigan legislators is calling on the state’s current crop of lawmakers to adopt a proposal for raising the state’s gas tax to fix the beleaguered roads.

The newly formed group, which calls itself the Michigan Consensus Policy Project, has proposed a plan that it says would yield an estimated $2.7 billion annually by gradually raising the gas and diesel tax in Michigan over the next decade.

Wikimedia Commons

By 2028, the gas tax will increase by 47 cents under the project’s plan. That means the tax would almost triple from 26.3 per gallon to 73.3 cents in less than a decade.

The group’s proposal was released before Gov. Gretchen Whitmer is set to give her first State of the State address on Feb. 12 and her initial budget proposal in March. The Democrat, who campaigned on the theme of “fixing the damn roads,” is expected to talk about infrastructure solutions at length.

The proposal is largely in line with the recommendations of GOP former Gov. Rick Snyder’s 21st Century Infrastructure Commission.

The group is being co-chaired by former state Sen. and Budget Director Bob Emerson (D-Flint) and former Senate Majority Leader Ken Sikkema (R-Wyoming). The steering committee that includes former Democratic Lt. Gov. John Cherry and former Republican House Speaker Paul Hillegonds.

Ken Sikkema

The group is working in collaboration with the Ann Arbor-based Center for Michigan, a centrist think tank which publishes Bridge.

How to raise funding to address Michigan’s infrastructure has been an ongoing question and the group believes that increasing the gas tax makes the most sense because of its proportionality to use.

“Traditionally, (the gas tax) is what as much a user fee as anything else that you can use to pay for the roads,” Emerson said. “It’s closely correlated to the amount of driving that people do.”

An outline of the group’s proposal shows that a typical family of four with two vehicles earning $48,000 per year would likely pay an additional $67.41 in 2020, the first year of the proposed gas tax increase, when it would increase 7 cents per gallon. That same family would then pay an additional $48.15 annually for the next nine years as the tax goes up 5 cents annually until it reaches 47 cents.

In the first year, 2 cents of the 7 cent increase are earmarked for local governments to do their own road construction projects, according to the plan.

Gretchen Whitmer | Ken Coleman

The group said that user fees like the gas tax would be preferable as opposed to borrowing. Whitmer has signaled support for each, saying previously that she would be open to bonding if the Legislature wouldn’t approve the fee increases. 

Just what the Legislature’s appetite may be for the proposed gas hikes is unclear. Requests for comment sent to a spokesperson for the majority House Republicans was not immediately returned.

Senate Majority Leader Mike Shirkey (R-Clarklake) is not a fan of the group’s plan.

“The proposal assumes a large increase in the gas tax is a sustainable solution to road funding, but advances in automotive technology make gas taxes an undesirable long-term solution,” he said in a statement. “All the proposed increase does is place a greater burden on families and household budgets without solving road funding for the future.”

The group acknowledged in its proposal that traditional cars likely will be going away, but said the gas tax is still the tax “most related to use” and will “remain so for a considerable length of time.”

The recommendations in Snyder’s 21st Century Infrastructure Commission report, a nearly 200-page document released in 2016, have largely never been acted upon by the Legislature.

Mike Shirkey

While the newly formed Consensus Policy Project aims to act in a bipartisan manner, road funding has remained elusive and highly partisan.

The GOP-dominated Legislature in 2015 narrowly passed a gas tax increase that will add more than $1 billion annually to roads funding by 2021, and this year roads will get a boost of $143 million in funding thanks to a tax shift approved in the dead of night in last month’s Lame Duck session.

Whitmer also has some additional funds to put toward roads this year thanks to a relatively small budget surplus.

Potholes tearing through a Meridian Twp. road | Susan J. Demas

Sikkema, however, said a plan is needed to fully solving the problem for the long-term, adding that he sees broad consensus, particularly in the business community, for increasing user fees as the preferred method for fixing the state roads.

“If this isn’t it, what is it,” Sikkema told reporters. “There’s a problem that has to be solved and if this isn’t the solution, I would welcome other alternatives. And I would say … the ‘do nothing’ approach is not acceptable.”

Democrats have proposed raising business taxes to fund roads in the past, which was, not surprisingly, opposed by business groups.

Gilda Z. Jacobs

Gilda Jacobs, president and CEO for the Lansing-based Michigan League for Public Policy, said that policymakers need to consider the impact on people, especially low-income workers, when crafting infrastructure plans.

“We certainly are in agreement that Michigan roads are in dire need of repair, and a gas tax increase that ensures the people using our roads are the ones paying to repair and maintain them is a good approach in concept. However, just today we put out ‘The Owner’s Manual for Michigan’ outlining the many difficulties Michigan’s working families are facing to make ends meet these days, and a gas tax is another area that would inordinately harm people with lower incomes. If a plan like this moves forward, we hope the needs of residents already struggling to get by are at the forefront, and that a gas tax is paired with an increase to the state Earned Income Tax Credit — one of our Owner’s Manual priorities — or other policy changes to offset the economic impact and better support workers earning lower wages.”

Nick Manes
Nick Manes covers West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels. His byline also has appeared in Route Fifty and The Daily Beast. When not reporting around the state or furiously tweeting, he enjoys spending time with his girlfriend, Krista, biking around his hometown of Grand Rapids and torturing himself rooting for the Detroit Lions.

1 COMMENT

  1. Gas tax is a dying revenue source as the fleet moves from internal combustion engine to EV. A better solution would be to include a transportation surcharge on electric bills as well as increase the gas tax. It should now be possible to tie EV registrations to utility bill addresses and make any such surcharge EV owner specific.

    Of course, increasing taxes on businesses to cover infrastructure maintenance and improvement would make too much sense.

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