Prop 1: Where exactly would your money be going?

Posted at 9:45 PM, Apr 16, 2015
and last updated 2015-04-16 21:45:37-04

MICHIGAN — With less than three weeks to go until voters decide whether to pass a ballot proposal aimed at funding road repairs, a lot of questions linger about where the money will be actually be spent and how much new revenue will be raised by the state.

In all, passage of Proposal 1 would would raise the state sales tax rate limit from the current 6 percent to 7 percent and would bring in nearly $2 billion in additional revenue, according to some estimates. A hike in the state sales tax is one of eight changes that could be made because of other bills attached to the proposal.

Last month, political and law enforcement leaders in Kent County made a public push for the passage of Prop 1.

While the proposal raises the state sales tax, it would eliminate the current sales tax paid on each gallon of gas and replace it with a wholesale tax on fuel. And it would increase with inflation and could wind up being as much as 40 cents per gallon.

The wholesale fuel tax is expected to generate upwards of $460 million in new revenue. Passage of the proposal would also trigger increased commercial truck fees, generating $50 million in new revenue, and would gradually eliminate discounts on vehicle registration fees. Currently, registration fees for new cars are reduced by 10 percent each year for the first three renewals. Eliminating the discounts would generate nearly $11 million in new revenue in 2016.

New ads from the pro-Proposal 1 group ‘Safer Roads Yes!’ tiptoe around the fact that not all of the money generated would go toward funding transportation in the state. The extra revenue brought in from an increase in the state sales tax would pump nearly $300 million into the state School Aid Fund and increase local government revenue sharing by roughly $100 million.

A recent poll by the Mackinac Center for Public Policy found 79 percent of people surveyed had already made up their minds on how they were going to vote. Just 5 percent of respondents said they had no plans to vote on the issue, indicating a strong turnout is expected for the off-year election.

Passage of the ballot proposal could cost the average household roughly $500 more in taxes each year, according to the Mackinac Center for Public Policy.