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No vote on gas tax hike, House Democrats propose biz tax hike to fix MI roads

Posted at 4:22 PM, Jul 14, 2015

LANSING, Mich. -- Lawmakers are spending their summer recess working to hammer out a deal on road funding, while Republicans opted for closed-door meetings Tuesday to come up with a solution.

A vote was possible Tuesday in the House on a revised plan passed by the Senate two weeks ago proposing a 15-cent gas tax hike while redirecting $700 million of the state's budget to road repairs.

The House passed its own version in June, but lawmakers did not take up a vote Tuesday on the Senate revisions.

The plan from the Senate would hike the gas tax from 19 cents to 34 cents over a three year period. The tax increase would apply to diesel gas too. An increase on the gas tax alone is expected to raise roughly $700 million in revenue.

Democrats who've criticized the plans from Republicans, calling them 'misguided' for relying  to heavily on general fund revenue, rolled out a plan of their own Tuesday that would raise $1.2 billion for road fixes.

The bulk of the plan, $900 million, relies on asking businesses to 'pay their fair share,' by raising the corporate income tax from 6 to 9 percent. The increase is expected to raise roughly $350 million in new revenue. Greimel said the plan demonstrates the largest tax shift in Michigan history.

Additionally, proposed re-regulation of the electricity market to require the state's biggest corporations pay more for service would raise roughly $225 million. Another $230 million would come from proposed re-negotiations of tax credits given to businesses.

“Unlike Republican proposals, our proposal will require corporations and not just middle-class families and seniors to contribute to building a state that works for everyone," Rep. Tim Greimel, D-House Minority Leader, told reporters during a press conference Tuesday afternoon.

“We’re not asking for a lot of money from these business entities compared to the massive tax cuts and breaks they’ve gotten."

The plan also calls for just $100 million from the general fund, which is the portion of money currently raised from the sales tax on fuel purchases.

Rep. Jon Hoadley, D-Kalamazoo, said presenting the proposal Tuesday is one way for Democrats to get discussions moving with Republicans who haven't done much to engage their counterparts.

“I think voters know, you can’t fix the roads on promises of money that may not come to exist," Hoadley said. "We need to have real change in the system for fixing roads and that’s going to require everyone sitting together to hammer something  out.”

The plan drew quick criticism from Republicans like Rep. Jeff Farrington, chairman of the House Roads and Economic Development Committee, who told FOX 17 the goal is to fix the roads, not put people back in the unemployment line.

“The idea of putting $900 million of taxes on the companies that have been hiring Michigan employees and drew us out of a recession is really bringing us down the wrong path," Farrington said.

Other points in the plan from Democrats:

  • Reduce truck weight limits to the federal level of 80,000 pounds.
  • No elimination of the Earned Income Tax Credit for working poor families.
  • Reform vehicle registration by either eliminating or reducing reduced fees on aging vehicles.
  • Increasing truck registration fees and fines for overweight trucks.

Farrington said the Democrats' plan might at least serve as a catalyst for future bi-partisan discussions before lawmakers take a final vote on a road deal.

The House will be back in session beginning Wednesday morning.