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Senate roads plan to boost gas tax by 15 cents could get Wednesday vote

Posted at 5:11 PM, Jun 30, 2015

LANSING, Mich. — A Senate committee Tuesday afternoon approved a new roads plan that calls for boosting the gas and diesel tax over the next three years in an effort to raise the more than $1 billion needed to fund and fix the state’s roads.

The Senate Government Operations committee met Tuesday to debate the plan that would raise the tax on gasoline by 15 cents over the next three years, and would tie that rate to inflation.

Under the plan, if passed, the current 19 cent per gallon tax on gasoline would increase by 5 cents to 24 cents per gallon beginning in October of this year. The rate would increase by 5 cents at the start of 2016 and 2017 effectively bring the tax on gas to 34 cents per gallon.

The same plan would apply to the diesel tax which would increase by 7 cents in October of this year, and then increase by 7 cents in 2016 and and 5 cents in 2017 to bring the total to 34 cents per gallon.

The gas tax increase alone is expected to raise roughly $700 million in revenue.

The plan, proposed by Senate Majority Leader Arlan Meekhof, R-West Olive, also calls for reducing the state’s 4.25 percent income tax, but those cuts would rely on growth of general fund exceeding inflation. Annually, $700 million from the state’s general fund would also be automatically re-allocated toward road funding.

The Senate’s proposal comes about a month after House Republicans passed their own $1 billion road plan, one that relied heavily on existing revenue while also mirroring many of the plans in the Senate version including: raising the tax on diesel to match the tax on regular gas, while also raising registration fees for hybrid and electric cars.

Both the House and Senate plans also call for cutting the Earned Income Tax Credit for working poor families.

During Tuesday’s committee meeting, several groups were opposed to the plan, due mostly in part to the proposed EITC elimination, including the Michigan League for Public Policy, the Michigan Economic Impact Coalition and the Community Economic Development Associaition of Michigan.

Representatives with the Michigan  Catholic Conference also spoke in opposition to the proposal and the proposed cuts to the EITC.

Sen. Goeff Hansen, R-Hart, told committee members he “reluctantly” supported the road bills, saying it was a very good start.

Democrats on the committee, including Sen. Jim Ananich, D-Flint, expressed opposition to the plan saying it ‘missed the mark. Ananich said he was reluctant to support a plan that would fund roads by taking away from families and the poor.

“This proposal fails in every one of those measures,” he said. “This effort to fix our roads should start by not making things worse.”

The bills were reported out of committee down party lines. The plan could come up for a full vote in the Senate as soon as Wednesday.

In May, Michigan voters overwhelmingly rejected a ballot proposal that would’ve raised the state sales tax 1 percent to fund roads.