The Michigan House of Representatives passed a transportation funding plan on Oct. 21 that could generate an estimated $1.2 billion per year. If approved by the Senate and Gov. Rick Snyder (R), the proposal would gradually increase the state diesel tax by 7.3 cents-per-gallon and the gas tax by 3.3 cents-per-gallon, as well as tax alternative fuels at the state motor fuel tax rate. Starting October 2022, state motor fuels and alternative fuels taxes would annually adjust based off changes in inflation as reported by the Consumer Price Index, with a cap to ensure the tax does not raise more than five percent per year. The package of bills also includes a 40 percent increase for vehicle registration and a new annual registration fee for electric and hybrid vehicles. Additionally, the plan would transfer $600 million per year from the General Fund to the state Transportation Fund.

In addition to the road-funding measures, the package includes bills to expand the Homestead Property Tax Credit, as well as decrease the state income tax rate if revenue growth exceeds the rate of inflation.

The Republican-sponsored bills were narrowly passed along party lines. Gov. Snyder has reportedly said he has “some concerns” about the plan.

House Speaker Kevin Cotter (R- Mt. Pleasant) stated, “You heard some criticism tonight because this plan takes a period of years before the $600 million of General Fund comes in, and the reason to do that is because we didn’t want to blow up the budget. This is a very fiscally conservative and responsible plan that I believe is worthy of not only passage by our partners in the Senate, but also signature by the governor.”

House Minority Leader Tim Greimal told the press, “It wasn’t enough for House Republicans to take $600 million out of vital state programs – including public safety, schools and health care – they now want to undermine those programs further by giving an income tax break for the state’s wealthiest people. Meanwhile, our roads still won’t get the $1.2 billion we need each year to fix them until fiscal year 2021. It’s obvious this plan was made to cater to the wealthy friends of Michigan Republicans, not the average working people who drive on crumbling roads to get to work every day.”

This is the second transportation funding plan to be approved by the Michigan House this year. The package now goes to the Senate for consideration, who passed their own plan July 1.


Read more:

Statement from Rep. Cotter:

Legislative Analysis by the House Fiscal Agency of the House Road Package: