House Dems push new business taxes to fix roads

    Downtown Lansing road | Susan J. Demas
    Updated, 11:48 a.m. with additional comments from House Democrats

    Michigan House Democrats are out with their own road-funding plan and it’s a sharp departure from what’s been proposed by Democratic Gov. Gretchen Whitmer.

    While Whitmer has asked for a 45-cent gas tax increase to raise $2.5 billion in new annual revenue for roads, the House Democrats are proposing raising the state’s corporate income tax and levying new taxes on heavy trucks that travel Michigan roads.

    Gov. Gretchen Whitmer at Affirmations in Ferndale, June 3, 2019 | Derek Robertson

    The caucus says the proposal, which dropped late Thursday, is based on the results of a survey of constituents who selected those mechanisms as their preferred method of raising new road-funding revenue. Only 9% of respondents favored raising the gas tax.

    “Too often the conversations that are happening at the top are very far removed from the real, everyday experiences of the people in our state,” state House Minority Leader Christine Greig (D-Farmington Hills), said in a statement.

    “So we went to the source and we asked people in our communities directly, what do you want to see done about our roads? And we came up with a way to make that happen. Good policy always starts at the ground level, and that’s where these policies came from.”

    Reps. Jon Hoadley, Yousef Rabhi. Christine Greig, Jon Hoadley and Tim Sneller announce the House Dems road-funding plan | House Democrats photo

    The four-bill package was not yet available on Friday morning on the Michigan Legislature website. The House Democrats’ statement says the four bills would do the following:

    • Increase the corporate income tax by 2.5%, implement a flow-through parity tax of 4.25 percent and repeal the “harmful” retirement tax
    • Create a Vehicle Miles Traveled Tax (VMT) on trucks of the two heaviest classes, 26,000 pounds or more, at 6 cents per mile
    • Create a “Rhode-Island style” bridge toll program for trucks
    • Create the “Fixing Michigan Roads” fund, where the revenue generated from the corporate tax and VMT bills would be directed

    The bills are sponsored by state Reps. Yousef Rabhi (D-Ann Arbor), Greig, Jon Hoadley (D-Kalamazoo) and Tim Sneller (D-Burton), respectively.

    House Democratic spokeswoman Aneta Kiersnowski told the Advance Friday morning that the caucus does not consider the bills to be “a fully-formed plan,” and said it would only raise about $1.2 billion. She said House Dems view it as “putting more options on the table.”*

    Michigan Capitol | Susan J. Demas

    A Whitmer spokesperson had no immediate comment on the proposed legislation, saying the governor’s office would need to review the bills. Whitmer has repeatedly said she selected the gas tax as the mechanism for new revenue because it’s closely tied to the amount drivers use the roads and the gas tax is constitutionally mandated to go toward road repairs.

    Still, it’s unlikely that the House Democrats’ plan will gain much traction in the GOP-controlled Legislature, which has already rebuffed Whitmer’s gas tax proposal.

    The House GOP last week advanced its own fiscal year 2020 transportation budget that failed to include any gas tax increase. House GOP leadership says the plan achieves a key goal of making sure that all taxes paid at the gas pump go toward roads, but Whitmer opposes the proposal. The GOP-controlled Senate also eschewed a gas-tax hike in its budget.

    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.


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