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No consensus on Michigan road fix as budget deadline nears

Posted at 2:40 PM, Aug 24, 2019
and last updated 2019-08-24 14:41:11-04

LANSING, Mich. (AP) — Gov. Gretchen Whitmer and state lawmakers who are struggling to find consensus on money for Michigan’s roads are bracing for an intense final month of deliberations before the deadline to pass a budget.

Talks continue between the Democratic governor and Republican legislative leaders. But with legislators returning from their summer break, there is considerable uncertainty over the path forward — including exactly how much more they may agree to spend, how to go about raising it and how the money would be distributed across the state.

Though tax increases, fund shifts and pension-related refinancing moves are under consideration, the sides do not appear close to any resolution nearly six months after Whitmer’s proposed 45-cents-a-gallon fuel tax increase to “fix the damn roads” quickly flamed out. It would have generated an additional $2.5 billion in constitutionally protected transportation revenue, a $917 billion boost in the coming fiscal year and $1.9 billion above what is expected for the 2020-21 budget if lawmakers also agreed to her request to stop diverting general funds to roads.

Business groups are urging the Legislature to raise taxes and to settle for nothing less than at least an eventual $2 billion funding increase in the transportation budget.

“We believe that this is a multibillion-dollar problem that needs a real solution — a substantial investment in crumbling roads and bridges,” said Michigan Chamber of Commerce President and CEO Rich Studley. “Whatever is done needs to be real money, money that can be put into a two- or three- or four- or five-year plan that will produce a positive return on investment.”

Yet some GOP legislators say their constituents oppose a net gas tax hike following a previous 7-cent increase that went into effect more than two years ago. Others, particularly in rural areas, drive on better roads than in urban areas and may not feel as compelled to spend much more.

One proposal that Republicans are pushing would remove the 6% sales tax on gasoline and hike the per-gallon gas tax by an equivalent amount. It would effectively boost road spending by $840 million by using money that mainly goes to schools and municipalities.

After meeting with Senate Majority Leader Mike Shirkey and House Speaker Lee Chatfield on Thursday, Whitmer’s office issued a statement saying “gutting our kids’ education is off the table.” She equated the proposal to a $400 per-pupil cut.

House Republicans countered that a spending blueprint they passed in June would not reduce school funding, while Shirkey’s spokeswoman called Whitmer’s claim “absolutely false.” Democrats, however, question the effects on K-12 schools and state revenue-sharing payments to local governments in future years regardless of whether they are held harmless in the coming budget.

Other GOP ideas on the table include adding the sales tax to transportation-related services. It could be limited in scope — if applied to ride-hailing services such as Uber and Lyft — or much broader if it were extended to the delivery of Amazon shipments and other products. Few specifics have been made public.

“There are real ideas out there that have merit,” Chatfield said, “that I’m going to continue talking about with my caucus and continue talking about with the governor, to ensure that people that are using roads-based services are also paying to help fix our roads.”

He resisted revealing how much more he supports pumping into roads overall.

“I think a lazy thing to do is just to simply throw out a number. We need to think about how we can spend taxpayer dollars responsibly and also talk about where that money goes,” Chatfield said.

Crunch time is approaching. The last time budget talks lasted this long was a decade ago, when lawmakers voted for a temporary budget to end an hours-long partial government shutdown amid an economic collapse.

Whitmer, whose birthday was Friday, tweeted that her wish was to pass the budget.