LANSING—Senate Majority Leader Arlan Meekhof, R-West Olive, today announced passage of a simple, straightforward plan to fund roads and reduce the size of state government.
“The citizens of Michigan made it clear that road funding should be a priority of state government. The priorities of the taxpayers are the priority of the Michigan Senate,” said Meekhof.
The eight-bill package passed the Senate with bipartisan support.
Beginning in Fiscal Year 2017, $350 million in General Fund revenue will be redirected and dedicated to a newly created section of the Michigan Transportation Fund. In Fiscal Year 2018, the redirected revenue will grow to $700 million making roads a priority for state spending.
“My colleagues and I are committed to reprioritizing spending to help solve the state’s road funding problem. Roads are clearly a priority for our citizens and state spending should reflect that priority,” said Meekhof.
In addition, the current 19 cent state gas tax rate would increase in increments of four cents, four cents and seven cents until fully implemented on January 1, 2017. The rate would then increase by the rate of inflation for each additional year in order to keep pace with the increasing costs of maintaining roads and bridges.
Diesel tax will initially be phased in at a higher rate to achieve parity with the state gas tax. Both gas and diesel tax will increase to 34 cents per gallon on January 1, 2017. The gas tax and diesel tax sunset in 2034.
When fully implemented, the combination of redirected funds and new revenue will result in $1.5 billion for Michigan roads and bridges.
“This is a responsible use of existing resources and additional resources to create a long-term road funding solution. It is simply unrealistic to assume we can adequately fund our roads and bridges without new revenue,” said Meekhof.
“Road funding has been stagnant since 1997. We’ve ignored this problem for 17 years and we simply can’t ignore it any longer,” said Meekhof.
The Senate plan also presents an opportunity to control the growth of government. Senate Bill 414 creates an automatic rollback of the state income tax rate each year that General Fund revenues exceed inflation.
Each fiscal year, General Fund expenditure growth will be limited to the rate of inflation. Economic growth over and above inflation will be returned to the taxpayers in the form of an income tax rate reduction.
“I believe limited government is good government. This legislation provides a mechanism to reduce the size of government and return taxpayer dollars to our hardworking families. Instead of an arbitrary rollback, the income tax rate will decrease over time as our economy grows. When Michigan succeeds it is our citizens who should reap the benefits,” said Meekhof.
Additional bills in the package also require road construction warranties for projects in excess of $1 million. MDOT and local agencies will be required to competitively bid for most projects that exceed $100,000 and townships will be encouraged to issue requests for proposal for projects of a certain amount that include at least 50 percent township resources.
To keep pace with changes in technology, the package institutes a process and fee schedule for taxing alternative fuels and imposes an additional registration fee for hybrid and electric vehicles.
The package is comprised of Senate Bill 414 and House Bills 4610-4616.
For more information please visit, www.fixingmiroads.com.