Gas tax increase part of package of bills aimed at raising new funding for Michigan roads
State Rep. Rick Olson said a bipartisan package of bills being introduced today is expected to raise "a little bit less" than $1.4 billion in new funding for Michigan roads.
"The quicker we move on it, the better," said Olson, a Republican from Washtenaw County's York Township and one of the lead sponsors of the package.
AnnArbor.com is awaiting details of the 13 bills but Olson said they call for an increase in annual vehicle registration fees and replacing the state's 19-cents-per-gallon tax on gasoline and 15-cents-per-gallon tax on diesel fuel with a tax on the wholesale price of fuel.
Gov. Rick Snyder spoke of the need to raise $1.4 billion in additional road funding last fall and cited some examples for how to get there.
Rick Olson
Instead of eliminating the gas tax and putting in a revenue-neutral sales tax at the wholesale level, a bill Olson is sponsoring is expected to bring in $541 million.
Olson said the 19-cent tax many motorists now pay at the pump will be switched to a 28.3-cent tax at the wholesale level, a 9.3-cent increase. The legislation proposes stabilizing that wholesale tax rate so it cannot rise or fall more than 1 percent per year.
"If gas prices continue to increase, we'll see some gradual increase at the pump, but it'll be modest year to year," Olson said.
By going with a revenue-positive wholesale tax proposal, sponsors of the bill package were able to come up with a less-regressive vehicle registration fee increase. Snyder previously threw out the idea of increasing the annual fees by $120 per person to raise $1 billion.
Olson said that's been ratcheted down to bring in about $500 million, costing the average vehicle owner roughly $60 a year. But the fee increase will be on a percentage-basis — about a 67 percent increase across the board for passenger vehicles — so it'll be a bigger increase for people with more expensive cars and less an increase for people with less expensive cars.
A bipartisan House workgroup on transportation funding led by Olson and state Rep. Roy Schmidt, D-Grand Rapids, released a report in September that found Michigan needs at least $1.4 billion in additional revenue to maintain its roads and bridges in good or fair condition.
The report found more than $1.4 billion in additional revenue is needed annually for years 2012 to 2015, rising to more than $2.6 billion per year by 2023.
The plan to raise $1.4 billion in new funding has support from Snyder, who will be counting on support from Democrats in the Legislature. But whether it has support from enough Republicans who are hesitant to approve tax or fee increases remains to be seen.
"It's not necessarily going to be easy, but I have a feeling there's more and more momentum building to get this done," Olson said.
Snyder, who has an accounting background, argues it makes financial sense to start paying more to fix roads now rather than wait and face an even bigger repair bill in the future.
Richard Hammel
"Improving our roads and infrastructure are key to growing Michigan's economy and creating good-paying jobs for our residents," Hammel said in a statement. "This bipartisan package of bills is a good place to start the discussion about what we need to do to maintain our infrastructure now and prepare for our state's future needs."
Democratic leaders say the bipartisan package of bills addresses a number of critical road and transit issues and includes nine members of the Democratic caucus as bill sponsors.
"House Democrats are going to be vigilant in ensuring that this package addresses the needs of our businesses and communities and the economic future of our state, but also making sure that our middle class and working families are shielded from bearing the entire cost of these proposals," Segal said in a statement. "We are anxious to begin discussions about rebuilding our state and our economy and getting our workers back on the job."
According to the Michigan Department of Transportation, Michigan has a total of 120,256 miles of paved roadway — including 9,716 miles of state trunkline, 89,755 miles of county roads, and 20,785 miles of city and village streets.
Olson said no one in the Legislature is disputing that $1.4 billion in additional funding is needed to properly maintain Michigan's transportation infrastructure. But whether they'll support a measure to increase taxes and fees in an election year is another matter.
Olson argues it's a necessity.
"If we don't spend that much more, we're gong to end up spending much more in the future," he said. "I don't like paying for my oil change, but I do and you do, too. And why do you do that? If you don't maintain your car, you'll pay a bunch more later.
"If we allow the roads to deteriorate more, it's going to cost us a whole lot more."
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.
Comments
hank
Thu, Jan 26, 2012 : 7:30 p.m.
Let the truth be told. The price at the pump for gas is controlled in part by the wall street oil speculators. Next up your friendly oil company distributor who adds in profits. Last but not least federal and state taxes. So with that in mind this total package is brought to you by republicans . The republicans want unfettered controls on wall street, tax breaks for businesses and now a fee and tax increase on gas. Shared sacrifice all around.
hank
Thu, Jan 26, 2012 : 7:09 p.m.
This is Synder's pay back for middle class voters that supported him. Gas tax increase that will result in food cost increase for shipping and for good measure an extra fee for auto registration. While your at it don't forget the over crowed classrooms at your child's school. This is being brought to you by the republicans so keep on voting for them their not done with you yet.
Mike
Thu, Jan 26, 2012 : 7:08 p.m.
Thank God we have these creative legislators that will find ways to hide tax increases in places we will never notice plus plenty of sheeple to keep re-eelcting them.......
dlb
Thu, Jan 26, 2012 : 7:02 p.m.
It is about time! We have needed to find some way to increase the gas tax or something to raise reveune to repair our roads, now we may even have a bipartisian measure? With improved fuel economy, many of us may be paying less in gas taxes than we paid 10 years ago.
trespass
Thu, Jan 26, 2012 : 6:54 p.m.
Maybe this is why Olson decided to run as a Democrat in the next election. Maybe Snyder should do the same. Tax and spend. Whether it is a tax on registration or a tax on gas, it is all regressive. What percentage of Snyder's income does this represent? Snyder is pro-business but that is not the definition of a conservative. Olson just does whatever the Governor or the party leadership want. Then he wants to change parties (but by the way he told the GOP leadership that he would still caucus with the Republicans).
hank
Thu, Jan 26, 2012 : 7:34 p.m.
I've got a definition of a conservative but AACM wouldn't let me.
Carole
Thu, Jan 26, 2012 : 3:55 p.m.
I'm op0posed to any new taxes especially on gas --- the price is already way too high with oil companies making huge profits. And, with the higher price per gallon for gas, the state is taking in more on taxes.
Ron Granger
Thu, Jan 26, 2012 : 3:53 p.m.
Vehicle Registration fees are already very high in Michigan, especially for older vehicles that have little value. Those fees are very regressive on the poor. Snyder never met a tax or fee on the working class that he didn't like.
Richard Johnson
Thu, Jan 26, 2012 : 2:13 p.m.
Price of a gallon of gasoline on 1/20/09 when obama took office was $ 1.89. Price of a gallon of gasoline now $3.49 Gasoline prices have gone up 80% since obama took office. Just imagine how much gasoline will cost during the summer. Does this bode well for re-election ?
Sparty
Thu, Jan 26, 2012 : 10:14 p.m.
Ever hear of middle-east politics? Maybe the Middle-Eastern Spring? Change in Power in many countries there? How is that Obama's fault? They are independent countries that set their own market rates, we are the consumer in case you've forgotten that? The President gets shot own on every attempt at green energy so he can't be held accountable to the price of refined gasoline in the US. How about the US Oil Companies taking advantage of billions of dollars from the government and being protected by the tea drinking republicans?
hank
Thu, Jan 26, 2012 : 7:13 p.m.
Place the blame where it belongs, on the oil speculators supported by the republicans .
ruminator
Thu, Jan 26, 2012 : 1:47 p.m.
Still no mention of getting to the root cause of our poor roads. The truck weight limits need to be reduced! No new tax until we better manage the existing revenue. Tax & spend is not the way to end the cycle of destroy & patch.
stephen reynolds
Thu, Jan 26, 2012 : 11:24 a.m.
it never bothers a republican to raise taxes ask this man how much he spent on his tie and suit money is the object for him ill bet
Monica R-W
Thu, Jan 26, 2012 : 7:57 a.m.
Republicans.....no new taxes....well that was until we raised taxes by calling them car registration fees and a new need to add a gas tax.....
EyeHeartA2
Thu, Jan 26, 2012 : 4:42 p.m.
I'm sure you can supply a link that shows where Rick said no new taxes, right? No? Maybe that's because he didn't. Nice try, but..fail.
Basic Bob
Thu, Jan 26, 2012 : 1:34 p.m.
This will directly fund union construction jobs. You should be doing the happy dance!
bobcat300
Thu, Jan 26, 2012 : 6:09 a.m.
Michigan's weight loads on large truck is the heaviest in America. With the heaviest loaded truck in America the roads will be damaged. Michigan needs to being there weights loads in line with the rest of the states so our roads will last longer which means less tax dollars for the roads. Truck lobbyist don't like to hear this!
Basic Bob
Thu, Jan 26, 2012 : 1:33 p.m.
Michigan has ***lower*** per-axle weight limits, but must allow the heavier federal standard trucks from Ohio and Ontario into the state. Do your homework.
Mick52
Thu, Jan 26, 2012 : 4:12 a.m.
Nothing new, it was bound to happen at one time or another. Back in 2009, it was in the hopper from democrat Pam Byrnes: <a href="http://www.mlive.com/news/index.ssf/2009/05/proposed_laws_would_raise_mich.html" rel='nofollow'>http://www.mlive.com/news/index.ssf/2009/05/proposed_laws_would_raise_mich.html</a> And on the federal level by John Dingell in 2008: <a href="http://www.foxnews.com/story/0,2933,339589,00.html" rel='nofollow'>http://www.foxnews.com/story/0,2933,339589,00.html</a> The Michigan initiative was for roads. Rep Dingell was trying to cut consumption. The increase in the use of fuel efficient cars has cut gas tax revenue so there has to be a way to increase funding for transportation repair and maintenance. Olson's remark, "If gas prices continue to increase, we'll see some gradual increase at the pump, but it'll be modest year to year," is absurd. Among consumer products gas prices are one of (if not the) most volatile, a lot of factors can make gas prices jump quickly. I think that is what killed the 2008/09 proposals, it would have been political suicide to impose higher fees right after gas hit its highest price.
Mick52
Thu, Jan 26, 2012 : 7:42 p.m.
Get up to speed SBbuilder, I am not talking about Michigan alone, but nationwide. I find no data that says driving less is the major cause, most reports list both as a major cause. And with hybrids and electric cars there is no way to determine mileage stats. Here is the most recent article I can find and it shows driving peaking in 2007, declining when gas prices spiked in '08 but remained steady since and far more then 2001 to 2004. High gas prices is the biggest reason people drive less, but to say if is far more responsible seems to be unsupportable. In that same time period hybrid vehicles took off with high sales.
sbbuilder
Thu, Jan 26, 2012 : 4:56 a.m.
MIck52 "The increase in the use of fuel efficient cars has cut gas tax revenue..." Ahhh, not so fast. The reduction in gas tax revenue is far more attributable to Michigan consumers driving far fewer miles. The number of fuel efficient cars does contribute to the reduction, but it is much smaller.
Dan
Thu, Jan 26, 2012 : 4:02 a.m.
If motorists want well-paved roads, then they need to be the ones to pay the bills for them.
Left is Right
Thu, Jan 26, 2012 : 3:18 a.m.
I'm certainly for a modest increase in gas tax to fix our egregious roads but I'm a little uncertain as to why this would be levied at wholesale rather than retail. And I'm a little surprised no one at annarbor.com ferreted this out (kind of an obvious question even for me). Bob Lutz has some good arguments for increasing the gas tax as opposed to mandating manufacturer MPG averages but I suppose this really needs to be done at a national level to be effective (of course Michigan, just for once, would like its share back).
A2comments
Thu, Jan 26, 2012 : 1:50 a.m.
How does charging more for expensive cars make sense? Use of roads is the issue, so make some of them toll roads.
Norman Alred
Thu, Jan 26, 2012 : 1:09 a.m.
Man, I am sure glad we elected those "No New Taxes" folks. Can you just imagine how horrible the tax hikes would be if we had Democrats running things in Lansing?
EyeHeartA2
Thu, Jan 26, 2012 : 4:41 p.m.
I'm sure you can supply a link that shows where RIck said no new taxes, right? No? Maybe that's because he didn't. Nice try, but..fail.
tim
Thu, Jan 26, 2012 : 1:05 a.m.
Bad idea-- I could see such a thing when gas was around 2.00$ a gallon but the prices have gone up too fast for consumers. An extra gas tax would be too excessive for cash strapped Michiganders. Once again Snyder will not propose a modest income tax increase too pay for Michigan's infrastructure ( he's starting to look a lot like Granholm).
1bit
Thu, Jan 26, 2012 : 12:54 a.m.
I like well-maintained roads and I understand that this costs money. Apparently, we have some smart legislators who understand this as well and, to my shock, are actually working together to come up with a solution. Cheers to them and to bipartisanship! Hopefully our legislators in Washington take this example as well.
martini man
Thu, Jan 26, 2012 : 12:29 a.m.
What a great idea !!! Increasing fuel costs on businesses and on people driving to and from already low paying jobs. And if anyone actually expects this extra revenue to be spent on improving roads they are totally lost in the ozone. Michigan already has taxes that drive away business and destroy jobs. Look at the vacant factories that are in Wastenaw county ..not to mention the rest of the state. Fuel costs will go up , jobs will be lost, and the roads will still be a mess. Snyder ..you look more and more like a liberal every day.
Anders
Thu, Jan 26, 2012 : 1:28 a.m.
Maybe business leave because of the poor roads? I sure wouldn't open a factory in a place with no infrastructure and zero tax.
blahblahblah
Thu, Jan 26, 2012 : 12:10 a.m.
Speaking of gasoline, Apple has just surpassed Exxon as the most valuable publicly traded company in the world. But did you know that all the energy concentrated in one gallon of gasoline (energy density) is enough to charge an iPhone once a day for almost 20 years?
Homeland Conspiracy
Thu, Jan 26, 2012 : 1:39 p.m.
Apple has created a lot of jobs over the years. But today, most of the jobs created by Apple are not American jobs, they're sweatshop-style jobs for miserable, overworked workers in China. According to the New York Times, Apple employs 43,000 people in the United States. That's not an inconsiderable number of people. However, Apple no longer builds its own devices. There was a time when Apple computers were actually manufactured in the United States. Today, Apple products are built in China. Foxconn City has 230,000 people working to make iPhones and iPads
Basic Bob
Thu, Jan 26, 2012 : 1:29 p.m.
Can it get you to work or the grocery store?
rosewater
Wed, Jan 25, 2012 : 11:33 p.m.
And what is stopping the wholesaler from passing that 9.3 increase on to the Michigan motorist??? Nothing. Dear Mr. Snyder and Mr. Olson you are pricing me right out of Pure Michigan.
stephen reynolds
Wed, Jan 25, 2012 : 11:18 p.m.
if the price of gas increases well see an increase at the pump what?
Sallyxyz
Wed, Jan 25, 2012 : 11:12 p.m.
A 67% increase in car registration fees? This must be a joke. How do these clowns in Lansing get away with this? Get ready for much higher gas prices. If you think BIG OIL will absorb their new wholesale taxes, dream on. I'd like to see an article specifically stating the price at the pump and the price for the car registration fees if this debacle legislation passes. The way it's written, the actual costs for consumers isn't stated.
Basic Bob
Thu, Jan 26, 2012 : 1:28 p.m.
You are paying discount rates now for discount roads.
Rick Neubig
Wed, Jan 25, 2012 : 10:32 p.m.
Interesting - " Michigan needs at least $1.4 billion in additional revenue to maintain its roads and bridges in good or fair condition." Sure would be nice to have roads better than just "fair condition".
Tintin Milou
Wed, Jan 25, 2012 : 10:20 p.m.
As of 2008 there were more than 100 countries in the world with higher gas prices than the US: <a href="http://money.cnn.com/2008/05/01/news/international/usgas_price/" rel='nofollow'>http://money.cnn.com/2008/05/01/news/international/usgas_price/</a> I think these lines here do a pretty good job in explaining the root of the problem: "But those cheap gas prices - which Americans have gotten used to - mean they feel price spikes like the ones we're experiencing now more acutely than citizens from other nations which have had historically more expensive fuel. Cheap gas prices have also lulled Americans into a cycle of buying bigger cars and bigger houses further away from their work - leaving them more exposed to rising prices, some experts say."
Basic Bob
Thu, Jan 26, 2012 : 1:27 p.m.
It's about demand for small cars - nonexistent in the U.S. All those folks that feel "safer" in their suburban assault vehicles _should_ pay accordingly. There are plenty of cities where one can buy a house for cheap. Unfortunately they are not necessarily safe to walk in or close to a job. Many people in Europe rely on public transportation and don't have more cars in the driveway than people in the household.
Sallyxyz
Wed, Jan 25, 2012 : 11:09 p.m.
What choices do Americans have? Cars in Europe get 50-60 mpg average. Yes, gas prices are higher in Europe, but the cars get much better mileage and Europeans have wonderful mass transit options. Are Americans supposed to buy expensive houses closer to cities? It's a fact that housing costs have skyrocketed in city centers where walking to work is possible for the few rich who can afford it. The US is built on a car culture, the cities do not have affordable housing in locations where a car would be used less often. Cars are much larger in the US than cars in Europe also, and the BIG OIL companies want to keep us dependent on oil and cars to fatten their profits. Why aren't all the smaller high mileage European cars available here? Even comparing compact cars available here and in Europe, the mileage is much higher in Europe than in the US, for the same car. It's all about BIG OIL and BIG AUTO to fatten their profits and screw Americans.
Ryan J. Stanton
Wed, Jan 25, 2012 : 10:02 p.m.
In case anyone is wondering where the rest of the $1.4B comes from, a recent article from MIRS stated "closing of loopholes in the car registration law nets another $200-250 million, efficiencies add another $100 million or so and taking the sales tax revenue from gas that goes into the General Fund would produce another $100 million."
sbbuilder
Wed, Jan 25, 2012 : 9:59 p.m.
Should I expect to hear resounding cheers from the tax and spend liberals who normally lambaste everything our governor proposes? After all, this is smack down the middle of the 'we must raise taxes' bunch. Are you guys happy now? Eh?
hank
Thu, Jan 26, 2012 : 7:37 p.m.
Sorry this is your boy's idea.
dotdash
Wed, Jan 25, 2012 : 11:01 p.m.
Yes. We'd like the roads fixed and we're happy to see a solution.
Homeland Conspiracy
Wed, Jan 25, 2012 : 9:58 p.m.
Let me tell you how it will be There's one for you, nineteen for me 'Cause I'm the taxman, yeah, I'm the taxman Should five per cent appear too small Be thankful I don't take it all 'Cause I'm the taxman, yeah I'm the taxman If you drive a car, I'll tax the street, If you try to sit, I'll tax your seat. If you get too cold I'll tax the heat, If you take a walk, I'll tax your feet. Don't ask me what I want it for If you don't want to pay some more 'Cause I'm the taxman, yeah, I'm the taxman Now my advice for those who die Declare the pennies on your eyes 'Cause I'm the taxman, yeah, I'm the taxman And you're working for no one but me.
leaguebus
Wed, Jan 25, 2012 : 9:57 p.m.
Now, we pay 6% sales tax on gas at the pump which goes into the general fund. If a tax is added to the wholesale price of fuel, we will pay 6% sales tax on this wholesale tax, too. Why not take the 6% sales tax off the pumps and add it to the wholesale price along with the new wholesale tax and apply all this to the road repair funds. Forget raising the vehicle fees and raise the income tax slightly to offset the loss of the sales tax on fuel and call it a day? Oh, thats right, Republicans don't believe in raising taxes, cough, cough. By the way, there is a bill in the legislature to lower the income tax rate, good bye more teachers and public safety people.
bobcat300
Wed, Jan 25, 2012 : 9:46 p.m.
Do you think the Oil companies are going to eat the tax increase and not pass it along! Follow the yellow brick road
Basic Bob
Thu, Jan 26, 2012 : 1:22 p.m.
Think of it as your incentive to use less fuel. You don't need a wizard.
lloyd payer
Wed, Jan 25, 2012 : 9:38 p.m.
tax tax same old contractor who ripped us off floridia here i come
javajolt1
Wed, Jan 25, 2012 : 9:36 p.m.
Gas prices have risen 82% in the past three years....and we're going to raise the gas tax. Since everyone uses gasoline.....just call it s tax. Wait....Barack Obama didn't mention inflation of gasoline or groceries in his speech last night. Both have risen big time!
Sparty
Thu, Jan 26, 2012 : 10:06 p.m.
Naturally, everything unpopular that a Republican does is Obama's fault --- didn't you know that?
hank
Thu, Jan 26, 2012 : 7:38 p.m.
This is a republican proposal but your blaming the President?
bobcat300
Wed, Jan 25, 2012 : 9:35 p.m.
Hey Rick can you say 1 term!!!!!!!
Marshall Applewhite
Wed, Jan 25, 2012 : 11:42 p.m.
Wanna bet?
dotdash
Wed, Jan 25, 2012 : 9:32 p.m.
It makes sense for the roads to be fixed and it makes sense for those who use them to pay to have them fixed. I'm glad to see the Republicans willing to unbend a bit and work across the aisle. I wish they would do it more.
leaguebus
Wed, Jan 25, 2012 : 10:01 p.m.
They unbent big time when the dumped the property tax credit and added pensions to the tax roles. But they saved face by lopping $1.8B off the business tax. I love the way they think.
Vivienne Armentrout
Wed, Jan 25, 2012 : 9:25 p.m.
Thanks for staying on top of this story. It would be great if you could post the numbers of the bills when that becomes available.
Ryan J. Stanton
Wed, Jan 25, 2012 : 10 p.m.
You're welcome. I'll share what I know when I know it.
Brian Kuehn
Wed, Jan 25, 2012 : 9:24 p.m.
First of all, the change from a tax at the pump to a tax at the wholesale level is a bit dishonest. Obviously our legistators think we will forget about the tax if it is hidden inside the price wholesalers charge individual stations. Second, the problem with significantly changing the tax structure is that it does not allow people to adjust their life styles. If one knew that gas taxes and vehicle fees were going to increase gradually over 10 or 20 years, one could actually plan for the change. Over a period of time one could purchase a more fuel efficient car, re-arrange one's schedule so a family only needed one car, move closer to work, etc... Our legislature has known for years we needed more money for roads and bridges. Rather than start slowly raising the tax rate several years ago and continuing the process for another several years, everyone is now faced with an abrupt jump in cost.
MIKE
Thu, Jan 26, 2012 : 1:33 a.m.
Don't worry leaugebus, the diesel tax will be passed down to you every-time you buy a product that moved by truck (which is everything you buy).
leaguebus
Wed, Jan 25, 2012 : 9:51 p.m.
We are still going to pay 6% sales tax at the pump. One thing thats good is that wholesale diesel will be taxed at the same rate as gas, meaning the large truckers will at least pay the same as we do while destroying the roads with their heavy loads.
tommy_t
Wed, Jan 25, 2012 : 9:07 p.m.
These "no taxes" Republicans sure are raising them faster than I can read.
Sparty
Thu, Jan 26, 2012 : 10:04 p.m.
Then why is his approval rating lower than Granholm's ever was?
Harry
Thu, Jan 26, 2012 : 3:44 p.m.
READ THE ARTICLE AGAIN! It is a bipartisian bill. Also when did Snyder say he would not raise taxes. He has made more steps to improve michigan in the short time he has been there than Jenny made in 8 years.
u812
Wed, Jan 25, 2012 : 8:44 p.m.
So if you are lucky enough to have a job in Michigan expect to pay more to Lansing and Detroit for things we are already paying for.
Fordie
Wed, Jan 25, 2012 : 8:54 p.m.
It's just such a pain that public goods that you use everyday cost money. I'm sorry you can't have everything in the world for free.
u812
Wed, Jan 25, 2012 : 8:47 p.m.
& those outside of those two cities will have to SACRIFICE.