A Republican plan to fund road repairs using taxes on fuel and corporations passed in the Michigan House Wednesday. In total, it would redirect more than $3 billion toward roads.
Representative Jamie Thompson (R-Brownstown) is a package co-sponsor. She said the bills are win-win.
“We're not raising people's taxes, guys. And we're not saddening our future generations with additional debt from this plan. This is a funding shift with money that we already actually have,” Thompson said in a floor speech Wednesday.
Roughly $2.2 billion in road funding would come from corporate income tax revenue that would have otherwise gone to the state’s general fund.
House Speaker Matt Hall (R-Richland Twp) said it’s important to assign that money to roads before it goes to something else.
“We need to dedicate it off the top because what's happening now is it's going into a discretionary pool and it's competing with new government programs, it's competing with all kinds of things, universities, all kinds of things,” Hall said during a press conference ahead of the House vote on the legislation.
Republicans say they plan to replace the gap in general fund dollars with the phasing out of state business incentives, a projected state surplus, and cuts to earmark spending.
The rest of the funding for roads would come from an increase in the motor fuel tax. The bills would cut general sales tax on gas to balance out the higher tax rate specifically on fuel.
Schools rely on funding from that general sales tax, so the plan would set aside $755 million of sales tax revenue for schools to try to make up for that loss.
Representative Julie Rogers (D-Kalamazoo) argued the proposal would come at the cost of state services in the long-term.
“We don't even know which programs and departments these cuts will apply to,” Rogers said.
Republicans haven’t specified which earmarks would be cut or how their plan would account for that new hole in sales tax revenue.
Representative Pat Outman (R-Six Lakes) chairs the House Transportation and Infrastructure Committee. He promised nothing important would be at risk.
“We're going to cut additional waste out of our budget. It's not going to be that hard to do. The budget has exploded. We will go through it line by line. We will find areas in our budget that are not getting taxpayer value,” Outman told reporters.
But Democrats who largely voted against the plan, aren’t buying it. Representative Noah Arbit (D-West Bloomfield) criticized the bills as smoke and mirrors.
“It’s not robbing Peter to pay Paul. It's robbing Peter and Paul. And Mary's already dead,” Arbit told reporters. “That’s the reality, because it's just shifting money around and not accounting for where that money is coming from.”
Governor Gretchen Whitmer put out her own vision for fixing roads in February. It also called for putting all taxes collected at the gas pump toward roads. But Whitmer’s idea also called for raising new state revenue through taxes on large corporations and the marijuana industry.
Stacey LaRouche is a spokesperson for Whitmer.
“We are encouraged to see the legislature make roads a priority, but the current legislation moving through the House does not achieve the goal,” LaRouche said in a written statement.
She said Whitmer “is open to suggestions from Republicans and Democrats, but inaction is not an option.”
Representative Alabas Farhat (D-Dearborn) took his stab at funding roads through taxes on digital advertising, corporate income taxes, and raising that rate so schools wouldn’t miss out on funding. Farhat was among the Democrats who supported the Republican plan during Wednesday’s vote.
Elsewhere, Democrats have been reluctant to lay out a specific alternative to what House Republicans proposed.
House Minority Leader Ranjeev Puri (D-Canton) said it was “a non-starter” to pass a plan that doesn’t involve increasing state revenue. Puri told reporters there were several options available but did not provide many more details about what he would like to see.
“The desire here for me is to stay away from the political rhetoric. I don't need to be another cook in the kitchen on this. We want to find a way to actually negotiate this in good faith and find a pragmatic solution that actually works,” Puri told reporters.
It’s now up to the Democratically-controlled Michigan Senate to decide what happens next with the bills.
