Governor Rick Snyder has signed legislation that will increase fuel taxes and registration fees and re-prioritize spending to raise more than $1 billion to fix roads.
Snyder finally got to sign a road-funding package four years after initially asking state lawmakers to come up with the money. Half the money will come from taxes and fees. The other half will be pulled from the state’s General Fund.
“And it’s not just about asking for more revenue,” he said. “It’s about investing in Michigan’s future to create jobs.”
Specifically, the plan will:
- increase state fuel taxes by 7.3 cents a gallon starting in 2017, and index them to inflation
- hike the diesel tax by 11.3 cents a gallon
- boost registration fees by 20 percent (an average of $20 per vehicle)
That’s expected to generate $600 million. The other half will come from re-directing spending from the state’s General Fund starting in 2019. The governor says he thinks that can happen without having to cut other services.
“Michigan’s economy has been growing,” he says. “We’ve seen great growth, great additional resources, so this is about investing the growth in Michigan’s future economy.”
But critics, Democrats in particular, say the plan is an anemic response to the need for infrastructure investment, and it will allow needed repairs to languish. They also say it puts critical services at risk if rosy economic forecasts don’t pan out.
The plan will also boost the Homestead Property Tax Credit, and roll back the state income tax rate starting in 2021, if the state shows sufficient growth in the economy and tax revenues.