Snyder Signs Road Funding Bills

Governor Rick Snyder Tuesday signed into law a $1.2 billion plan to fix Michigan’s roads.

The plan relies on shifting $600 million from the General Fund, increasing the gas tax by 7.3 cents and the diesel tax by 11.3 cents, and hiking vehicle registration fees by $20, on average.

The plan also includes rolling back the income tax when General Fund growth exceeds inflation times 1.425 and expands the Homestead Property Tax.

Snyder says it’s the largest investment in transportation in Michigan in the last 50 years.

He says it’s also the first increase in registration fees in 30 years, adding it’s not just about asking for more revenue, it’s about investing in Michigan’s future to create jobs.

Opponents of the plan say it’s irresponsible to rely on $600 million in unidentified cuts.

But Snyder says the state’s economy is growing and the plan is not about making cuts, rather its investing dollars from future economic growth.

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Press Release from the Governor’s Office:

OKEMOS, Mich. – Michiganders will have safer roads and stronger bridges to travel on, after Gov. Rick Snyder today signed a seven-bill package implementing the state’s legislative solution to infrastructure funding.

The governor signed the bills in a public ceremony at the Michigan Infrastructure and Transportation Association, where he was joined by Lt. Gov. Brian Calley, Senate Majority Leader Arlan Meekhof, House Speaker Kevin Cotter, lawmakers, officials representing community, labor and business organizations, and numerous other stakeholders who worked diligently on a road funding solution.

“This package provides the single largest investment in transportation funding over the last half century. It will go a long way to improve Michigan’s roads and ensure a safe and efficient system of transportation essential to a stronger future,” Snyder said. “Residents and visitors alike deserve much better than what we drive on today. This targeted, ongoing investment will help preserve and fix our infrastructure now and in the future, which is fundamental to continuing and accelerating our economic comeback.”

Snyder added that the phased-in plan and approach can help ensure the state maintains its now trademark fiscal responsibility and smart budgeting that continues to invest in core priorities and needs like education, local communities, health and wellness, and public safety.

Meekhof said: “State government has a responsibility to maintain safe roads and bridges and the people of Michigan expect the legislature to meet basic infrastructure needs. The road plan redirects existing resources to reflect roads as a priority in the state budget, generates new revenue for a long-term solution and returns taxpayer dollars to our hardworking families. We neglected our roads for too long. Now we have a commonsense plan of action to improve our roads and make government more efficient and accountable.”

“This plan will allow our road and bridge repairs to ramp up and continue for years to come,” Cotter said. “Everyone in Michigan knows our roads are a mess and that they have been that way for far too long. Now that our economy is growing, we need a real solution that fixes our roads and keeps them in good condition for the foreseeable future. This is that plan.”

The comprehensive plan raises 20 percent more revenue than the last roads plan in 1997 and adds the important component of adjusting for inflation to ensure sustainability and maintain buying power. The majority – 61 percent of dollars will go to local road agencies in communities across the state – while 39 percent will be dedicated to state highways. Local agencies will be permitted to use up to 10 percent of funding for mass transit, with the exception of Detroit, which may use up to 20 percent.

Joanna Johnson, managing director of the Road Commission of Kalamazoo County said: “This revenue will assist road agencies in communities of all sizes across Michigan. The additional funding is vital as we continue asset management and system preservation efforts at the local level.”

General Fund dollars allocated for roads will be a 5-year phase-in period to allow fiscally responsible adjustments over time, beginning with $150 million in Fiscal Year 2019, $325 million in FY 20 and $600M in FY 21. When all the components of the phased-in funding plan are added together, it results in the significant, much-needed investment of the $1.2 billion required to fix Michigan’s roads and bridges.

The funding bills signed today by the governor are:
House Bill 4736, sponsored by state Rep. Michael McCready, which updates vehicle and motorcycle registration fees beginning Jan. 1, 2017. Registration and truck weight fees will increase by 20 percent, with a plug-in hybrid vehicle surcharge of $30 annually and an electric vehicle surcharge of $100 annually. It is now PA 174 of 2015.

HB 4737, also sponsored by McCready, restricts State Trunkline Fund administrative expenses at the Michigan Department of Transportation to 8 percent of expenditures, down from 10 percent, and requires warranties on all local road projects over $2 million dollars. The bill also creates a task force to study materials and methods for longer-lasting roads. It is now PA 175.

HB 4738, another McCready bill, updates taxes on fuel by 7.3 cents to 26.3 cents per gallon for all motor fuels, including diesel and natural gas, starting Jan. 1, 2017. Beginning Jan. 1, 2022, the tax rate will be indexed to inflation, helping to ensure that today’s solution remains a solution in the years to come. It is now PA 176.

HB 4614, sponsored by state Rep. Andrea LaFontaine, applies the truck fuel tax to natural gas and gasoline used by interstate trucks, starting Jan. 1, 2017. It is now PA 178.

HB 4616, also sponsored by McCready, ties the tax rate on diesel fuel to the same level as the tax on gasoline, making the per-gallon rate equal for all fuels. It is now PA 179.

Two other bills in the package implement targeted tax relief to offset the burden to Michiganders:

HB 4370, sponsored by state Rep. Holly Hughes, increases the homestead property tax credit from $1,200 to $1,500 and expands the range of eligibility for the credit to households earning $61,000 per year or less, up from $51,000 or less. It also extends part of that credit to renters, at the rate of 23 percent of rent paid, up from 20 percent. Each of these changes begin with the 2018 tax year. The bill is now PA 177.

Senate Bill 414, sponsored by state Sen. Wayne Schmidt, would roll back the individual income tax rate in any year that state General Fund revenue exceeds 1.425 times the rate of inflation, beginning in 2023. It is now PA 180.

The governor today also signed HB 4610, sponsored by state Rep. Aaron Miller, which allows townships to require county road commissions to competitively bid for contracts if the township contributed 50 percent or more to the cost of the road project, and HB 4611, sponsored by state Rep. Ed Canfield, which requires competitive bidding for local road projects that cost more than $100,000. The bills are now PA 181 and 182, respectively.

For more information on this and other legislation, visit www.legislature.michigan.gov.