House Republicans announce new road funding proposal

Posted at 1:52 PM, May 13, 2015

LANSING, Mich. -- Just one day after Senate leadership announced state senators would remain in session through the summer break to hammer out a road deal, leadership in the House rolled out a new road funding proposal Wednesday afternoon.

House Speaker Kevin Cotter, R-Mt. Pleasant, met with reporters at the Capitol  to unveil a plan he promised last week after voters overwhelmingly rejected the Proposal 1 ballot initiative.

Cotter stuck largely to what he hinted at last week, saying he favoreda plan that focused on using funds already available in the state's budget, as opposed to raising new taxes. The plan would raise $1.05 billion by dedicating future revenue growth, and re-prioritizing some restricted funds. It would also eliminate the Earned Income Tax Credit for low income people.

But, the House plan also relies heavily on projected revenue growth for the state's general fund. Cotter said it would dedicate $350 million in new general fund money to roads in 2016 and up to $700 million of the $9.5 billion in the general fund by 2018.

"We’re going to have increased dollars available within the general fund," he said. "This plan, even if we just went forward with it if there were no change, we’d be allocating only about 50 % of the anticipated growth so this is not going to put pressure on the general fund.”

Cotter said it was important to present a plan that solely focused on funding roads.

“The reason Prop 1 was the failure it was, it collapsed under its own weight," he said. “I think what the voters ultimately said very clearly was ‘give us just a roads plan’ and I think we also need to make use of current dollars and this is an exercise in that."

In start contrast to Proposal 1, which would've expanded the Earned Income Tax Credit, the House plan calls for outright elimination of the credit, which adds up to a projected savings of $117 million.

“This is all about tax fairness and I think that’s an appropriate discussion to have," said Rep. Lisa Posthumus-Lyons, R-Alto.

“When we’re talking about a holistic approach to making sure we are prioritizing and sending long term sustainable funding to our infrastructure, I think (cutting the Earned Income Tax Credit) is something you have to keep on the table."

Democrats though already pouncing on the idea, Rep. Brandon Dillon, D-Grand Rapids, even called it 'hocus pocus.'

“The idea you’re going to solve a serious problem like our infrastructure,  that requires real money to fix real roads and try to do that by coming up with some sort of fanciful projections about how much money we may or may not have in the future is entirely irresponsible," he said.

“We can do a lot better, voters actually want us to propose real solutions to this and I’m hoping this is more of a political document and press stunt rather than a real plan."

Dillon said the House plan doesn't fit with previous statements made by the governor or plans the Senate or Democrats have supported in the past.

“Our first step was seeing what the Republicans would propose, bu I think we’ve been very clear we’re willing to work with them," he said.

'Plan B' from House Republicans (courtesy MI House GOP)

'Plan B' from House Republicans (courtesy MI House GOP)

Also in the House Plan, is a re-prioritization of the state's so-called restricted funds, which is money that's allocated based on restrictions specified by the state constitution or statutes and can only be changed through legislative action. Cotter said he think there's an economic case to be made for the state to allow for the reallocation of some restricted funds.

“ I think a prerequisite to economic development is to have roads at least in reasonable condition," he said. "As businesses are making decisions on where they want to locate they look at many factors and I think all of us would agree that having roads that look like bombing ranges do not meet that important criteria."

The state currently collects about $20 billion dollars in restricted funds. Cotter's plan would redirect the Tobacco Settlement Revenue, which currently goes to the 21st Century Jobs Fund, to the tun of $75 million for road funding instead. His plan also eliminates the state's film subsidies and prioritizes the Tribal Gaming Compact revenue, to bring in $60 million and $50 million, respectively.

“It’s important that when the voters established a Constitution, we are not going to rededicate those funds because there was a certain intention for that," Posthumus-Lyons said. "But when you’re looking at economic development and the critical role our infrastructure plays, I think there’s a case to be made there.”

A full overview of the plan is available here.

The Republican-led Senate could unveil its own road funding plan before the end of the month.

Cotter told reporters Wednesday he was open to the idea of having the House work through the summer to come to a plan, but also added he believed it'd be realistic to see a vote within the next six weeks before the current House session ends.