Though the proposal is formally known by the House Fiscal Agency as the "Transportation Funding Package," the 10 bills included in the May 5 proposal extend beyond road funding to include alterations in state education funding and sales tax policies.
If Proposal 1 passes, the following bills will be enacted into law:
- Amends the General Sales Tax Act to exempt gas and diesel fuel from the sales tax after October 1, 2015.
- Amends the Use Tax Act to exempt gas and diesel fuels from the sales tax after October 1, 2015.
- Alters distribution of use tax revenue, decreasing funding to the General Fund from 66% to 62.64% and increasing funding to the School Aid Fund from 33% to 37.36%.
- Changes the current fuel tax of 19 cents per gallon of gasoline and 15 cents per gallon of diesel to a flexible tax rate that is based on average wholesale gas prices and inflation. Initial fuel tax rates under this system would be 41.7 cents per gallon for gasoline and 46.4 cent for diesel motor fuel.
- Amends the Motor Fuel Carrier Tax Act to make the motor fuel tax rates in that act consistent with the rates established in House Bill 5477.
- Eliminates the depreciation of registration fees for passenger cars, vans and light trucks for cars purchased after January 1, 2016.
- Creates a $75 annual tax surcharge on electric vehicles and a $25 surcharge on most hybrids.
- Increases registration taxes for trucks weighing over 26,000 pounds.
- Specifies that townships that contribute 50% or more to the cost of a road project can require that the county road commission contract for the work on that road project through competitive bidding. Currently, county commissions can opt not to award road project contracts to the "most responsible and reasonable best value bidder."
- Requires that the Michigan Department of Transportation develop and implement a performance-based rating system for road maintenance services. Though road agencies and construction companies currently abide by various regulations, a uniform rating system for recording and monitoring infrastructure performance is not in place.
- This bill is loaded with provisions. However, according to the nonpartisan Citizens Research Council of Michigan, the bill most notably increases infrastructure warranty transparency. When MDOT or a local road agency take on a road project, they can choose to purchase a "warranty" that obligates the contractor to repair the road project if it does not meet requirements. Currently, road agencies are not required to publicly disclose which roads are under warranty.
- Increase the Earned Income Tax credit from 6% to 20% beginning with the 2016 tax year. The Earned Income Tax credit was lowered from 20% to 6% in 2011 to generate increased revenue for the state government during the financial difficulties of the recession. Now that the economy is recovering, legislators are looking to restore the Earned Income Tax credit level to its previous level.
10. Senate Bill 80
- Requires districts regarding reimbursement of expenses available to the public on their website.
- Appropriate an additional $40.0 million in School Aid Fund revenues to the At-Risk program in the FY 2014-2015 School Aid Budget.
For more details about Proposal 1, the Transportation Funding Package, check out our post, "You'll see 7 bullet points on the May 5th road funding ballot question. We explain them here."
-Ari Sandberg, Michigan Radio Newsroom