ALAIEDON TOWNSHIP, Mich. (AP) – Michigan Gov. Rick Snyder will sign a road-spending package into law that includes the state’s first fuel tax and vehicle registration fee increases in decades.
The long-elusive legislation to be enacted on Tuesday raises the gasoline tax hike by 7.3 cents and vehicle registration fees by 20 percent in 2017. It also permanently shifts existing state funds toward road work starting in three years.
Michigan’s net annual transportation spending increase could total $825 million within five years, a near-19 percent boost.
The Republican governor will sign the bills at the Michigan Infrastructure & Transportation Association, a construction trade group headquartered in Alaiedon Township near Lansing.
What the plan will do:
– Raise the 19-cents-gallon gasoline tax and 15-cent diesel tax by 7.3 cents and 11.3 cents to 26.3 cents, starting in 2017. Both taxes will automatic increase with inflation in 2022 and every year after. Revenue is projected to rise by $400 million annually.
– Increase vehicle registration fees by 20 percent, beginning in 2017. Drivers with an electric or hybrid car will pay between $30 and $200 extra. Yearly revenue is expected to increase by $216 million.
– Shift general funds to the road budget – which already has occurred in five straight years – starting at $150 million in the 2018-19 fiscal year, $325 million in 2019-20 and $600 million in 2020-21 and beyond.
– Make more lower- and middle-income homeowners and renters eligible for the homestead property tax credit and boost the credit’s worth, starting in 2018. The tax cut is projected to equal about $200 million a year.
– Reduce the 4.25 percent personal income tax, starting in 2023, if general fund revenue growth outpaces the rate of inflation times 1.425. A one-tenth of a percentage point drop in the tax rate would cut revenue by $230 million annually.
– Deposit the first $100 million in fuel taxes into a new Roads Innovation Fund, beginning in the next budget year and every year until the Legislature takes a one-time step and releases the money to the transportation account. By March, a Michigan Department of Transportation Roads Innovation Task Force must report to lawmakers on ways to build longer-lasting roads.
– Designate about $60 million, or 10 percent, of the additional fuel taxes and vehicle fees for public transit (which is existing law), but earmark the extra general funds only for road and bridge work.
– Distribute the nearly $1.1 billion in permanent annual road funding as follows – $450 million to the state (39 percent), $450 million to counties (39 percent) and $250 million to cities and villages (nearly 22 percent).
– Continue setting aside 2 percent of the extra gas tax revenue, $6 million, for the Recreation Improvement Fund, which supports trails.
– Require the state, county road commissions, cities and villages to secure warranties for full replacement or repair of existing pavement projects that cost more than $2 million and for all new projects, and to publicly report project lifespan, warranty and other information.
– Let Detroit, with the approval of the MDOT director, use up to 20 percent of its state transportation funding allotment for public transit.
– Limit maximum spending on administrative expenses to 8 percent of state and local transportation budgets instead of 10 percent.
– Require competitive bidding on all local road agency construction and preservation projects costing more than $100,000 unless the agency finds that another method is in the public interest.
You can watch the bill-signing ceremony live online on WLNS.com beginning at 12:30 p.m.
6 News Capitol Correspondent Tim Skubick will have a complete report on the long road to today’s bill signing tonight on 6 News.