Second Attempt on Road Funding Moves Forward

Date: July 02, 2015

In a move
reminiscent of the 2014 lame duck session build up to the ill-fated Proposal 1,
the state House and Senate have moved two different versions of a new plan for
funding roads.

Before the
legislature left for the 2015 summer recess, the House passed a road
funding proposal over to the Senate that sought to fund roads out of existing
budget monies and revenue streams with a small increase in fuel taxes by
removing the difference between diesel and gasoline fuel taxes. The Senate has
responded with their own plan that would include a phased 15 cent per gallon increase
in the gas tax, more money from the General Fund and a potential income tax
cut.

The proposed
income tax cut would allow for reductions in the 4.25 percent income tax rate
starting with the 2018 tax year if revenue growth outpaces inflation, using a formula
baked into the bill language to determine when reductions would happen and at
what amount.

While the
plans from both chambers appear to mirror the 2014 lame duck proposals, they differ
from those plans in that the House has included some tax increases by dealing
with the diesel-gasoline parity issue and the Senate has moved toward using
existing revenues (general fund) instead of relying almost exclusively on a gas
tax increase.

While the
House road funding proposal is more consistent with the one they offered in
2014 that was supported by NFIB members, the Senate plan is an improvement over
their original proposal in 2014. It is likely that both plans will end up in a
conference committee over the summer where a final version will be hammered out
between the chambers and the Governor’s office.

NFIB was the
ONLY business group in Lansing to oppose the road funding plan in Proposal 1
that was overwhelmingly defeated at the polls. While we recognize the need for
good roads and adequate funding, this is a difficult time for fuel tax
increases on Michigan small business job providers. While we are encouraged by
the move away from total reliance on tax increases for funding, NFIB continues
to support policies that seek to use existing funding and revenue streams to
fund roads.

Related Content: Small Business News | Michigan

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