LANSING, Mich.— Sales taxes collected at the gas pump would be shifted to road repairs under a budget plan approved Thursday by the Michigan House, where majority Republicans called it a first step in response to Democratic Gov. Gretchen Whitmer’s call for higher fuel taxes to fix deteriorating transportation infrastructure.
GOP lawmakers said they structured their blueprint so schools and municipalities, which now get most of the sales tax on fuel, would be held harmless. But Democrats were skeptical, saying the spending bills would not do enough to improve the roads and ultimately would create new fiscal problems for education and local governments.
Michigan spends less per capita on transportation than many states but has fuel taxes that rank among the country’s highest. That is because it assesses a sales tax on gasoline — which is rare — while the revenue primarily helps fund education and local governments.
“People expect when they pay at the pump that every penny paid in taxes at the pump is a penny that is going to go toward roads. That is what we just accomplished with this budget while funding our roads at a record level without raising taxes one cent,” said Republican House Speaker Lee Chatfield.
The House action was the latest move in what appears likely to be a protracted budget process that that will extend into the summer months. Whitmer in March proposed her plan, including a 45-cents-a-gallon gasoline and diesel tax increase, while the GOP-led Senate passed its proposal in May. Her blueprint would eventually boost transportation spending by roughly $2 billion annually, while the Senate proposal would spend an additional $132 million earlier than planned.
Under the House budget, the state would gradually direct $850 million more to roads a year — though Chatfield characterized it as a “first step” and said there will be further talks with Senate leadership and the Whitmer administration.
Democrats opposed the transportation budget, K-12 budget and other spending bills that were passed Thursday. The measures would increase funding for schools and universities but less so than Whitmer wants. They also would cut public transit — shifting the money to roads — reduce information technology spending across state government and not include water infrastructure improvements proposed by the governor.
“We can do better. We have an obligation to do better,” said House Minority Leader Christine Greig. “House Democrats are ready to work with our colleagues on a budget that fixes our problems and not on one that creates new ones.”
Also Thursday, the House GOP backed after critics said the way the transportation budget was changed in a committee Wednesday could have halted or slowed the construction of a new bridge between Detroit and Canada. Canada is paying for the project entirely, but Republicans had concerns about transparency regarding reimbursements to the state for its expenses.
They reinserted a provision to let the state do work that is reimbursed, while adding new requirements so spending reports are submitted to legislators.