Gov. Rick Snyder signs road funding legislation
Snyder holds up a piece of concrete that fell from a bridge in Michigan. One in nine Michigan bridges are in need of repair.
He was joined by Lt. Gov. Brian Calley, leaders from the business community, educators and lawmakers from both parties to sign part of the road funding bill package passed by the legislature in December.
Plan will restore crumbling roads, bridges if backed by voters
Monday, Jan. 12, 2015
LANSING, Mich. – Gov. Rick Snyder today signed legislation that will restore Michigan’s crumbling roads and bridges, in part by ensuring taxes paid by consumers at the gas pump are dedicated to that purpose.
The initiative, which requires voter approval, would end years of financial neglect that plague Michigan’s deteriorating infrastructure by providing a long-term funding source. The multifaceted plan also benefits Michigan by generating additional dollars for education, local governments and recreational opportunities; and by giving low-income families a tax break.
“Michigan’s roads and bridges put lives at risk, drain family budgets and impede job growth. But we have an opportunity to change that,” Snyder said. “This plan makes long-term investments that will give motorists a safe, modern transportation system. It is a fair, thoughtful proposal that incorporates taxpayer protections and public transparency.
“Our lawmakers deserve credit for confronting this challenge. This initiative reflects the spirit of bipartisanship and compromise that is the hallmark of Michigan’s reinvention. With the public’s support, we’ll bring our roads and bridges up to date, which means greater prosperity for our state and its families.”
Michigan hasn’t updated its overall investment in roads since the gas tax was adjusted in 1997.
If approved by voters, the Legislature’s action would raise an estimated $1.3 billion a year for transportation. After the first two years when debt reduction is a priority, it will include nearly $1.2 billion going to roads and an estimated $127 million for public transit. More than 60 percent of the road revenue will go to counties, cities and villages for their local road and bridge needs. The plan also protects revenue for schools and local governments.
Highlights of the plan include:
- Removing the current sales tax on fuel and switching to a new wholesale tax for motor fuels (gas and diesel) that is more dynamic yet includes protections for consumers. Snyder explained that the current sales tax on fuel is constitutionally dedicated to the support of schools and local governments. It does not go for road maintenance. The ballot proposal will ensure that all state taxes paid at the pump will go to the support of transportation.
- Protecting schools and local governments from lost revenue by asking voters in the May 5 election to approve a 1 percent increase in the state sales and use tax on retail purchases, taking it from 6 percent to 7 percent. The result is an additional $300 million a year for schools and $94 million a year for local governments.
- Supporting state and local harbors, boating access sites and off-road vehicle trails with an additional $26 million a year when fully implemented.
- Providing tax parity by making the wholesale tax rates on diesel and gasoline equal.
- Freezing the registration depreciation tax for current vehicles, and eliminating its applicability for new vehicles. The registration rate is increased for trucks over 26,000 pounds.
- Assisting low-income families by restoring the Earned Income Tax Credit to its full level. The credit was reduced in 2011.
- Requiring that at least 20 percent of all maintenance contracts entered into by the Michigan Department of Transportation provide for payment based on performance outputs or outcomes. Michigan’s seven largest road agencies will be included in this system.
- Increasing the use of pavement warranties as much as possible, by establishing them on all projects where appropriate for state and local governments. There also is a reporting requirement under which the governmental entity must explain if it did not secure a warranty for a project over $1 million.
“We are grateful for and encouraged by the bipartisan leadership that led to passage of this package of bills that will provide a new, stable, long-term investment in our transportation infrastructure, while also preserving and enhancing investment in K-12 public education,” said Teresa Weatherall Neal, Grand Rapids Public Schools superintendent.
Snyder was joined by legislative leaders, members of the business and education communities, and transportation advocates as he signed House Bill 4539, sponsored by former state Rep. and current state Sen. Wayne Schmidt, which eliminates the sales tax on motor fuels.
Earlier in the day Snyder signed other bills in the transportation package:
- HB 5477, sponsored by state Rep. Rob VerHeulen, which moves Michigan to a wholesale fuel rate that includes a floor and a ceiling. It allows for taxation of compressed natural gas, liquefied natural gas, and other alternative fuels, but not electric vehicles.
- Senate Bill 847, sponsored by former state Sen. Gretchen Whitmer, which restores the Earned Income Tax Credit to its full 20 percent of the federal EITC level.
- HB 4630, sponsored by state Rep. Mike McCready, which freezes registration depreciation for current vehicles, and eliminates its applicability for new vehicles. The rate also is increased for trucks over 26,000 pounds.
- HB 5167, also sponsored by Schmidt, which requires at least 20 percent of all maintenance contracts entered into by the Michigan Department of Transportation to provide for payment based on performance outputs or outcomes. Michigan’s five largest counties and the city of Detroit will be included in this system.
- HB 4251, sponsored by state Rep. and current House Speaker Kevin Cotter, which allows townships that contribute at least half of the cost of a road project to require the use of competitive bidding to contract for the work.
- HB 5460, sponsored by state Rep. Dan Lauwers, which establishes warranties on all projects where appropriate for state and local governments. It also establishes a reporting requirement under which the governmental entity must explain if it did not secure a warranty for a project over $1 million. The bill also lets Detroit leverage dollars for transit, and includes $3 million for railroad crossings.
- HB 5492, sponsored by state Rep. Earl Poleski, which exempts fuel from the use tax.
- HB 5493, also sponsored by VerHeulen, which provides tax parity by making the wholesale tax rates on diesel and gasoline equal.
- SBs 80-81, sponsored by state Sen. Geoff Hansen, which provide an additional $40 million in funding for at-risk students in need.
The bills only take effect if voters in May approve the proposal. They are now Public Acts 467-477 of 2014, respectively.
More information on Michigan’s road needs is at www.michigan.gov/fixtheroads.
Watch the full-video of the Governor's press conference below: