Lawmakers and policy researchers discussed a Republican-led road funding plan Wednesday before the Michigan Senate Appropriations Committee.
The multi-step plan involves raising the fuel tax paid at the pump by $0.20 per gallon. All the money raised from that would go straight to road repairs.
Meanwhile, the proposal would also remove the sales tax from gas to balance out the higher fuel tax rate.
Schools depend on that sales tax for their own funding. So, the plan would set aside $755 million of sales tax revenue that would otherwise go to general fund spending for schools.
Another part of the plan involves pushing a handful of major corporations to pay the corporate income tax by weakening legacy business incentives that some still take advantage of. Up to $2.2 billion of that corporate tax would also go toward roads.
State Representative Pat Outman (R-Six Lakes) is a package co-sponsor. He said there’s enough room in the budget for the roughly $3.1 billion plan.
“The vast majority of the cuts we’re proposing come from corporate handouts—corporate subsidies. Those are what we’re trying to pare back and re-prioritize that money into roads. We’re not looking to cut any essential services,” Outman said during Wednesday’s committee hearing.
Democrats, however, are skeptical the math would work out without either raising taxes or cutting something important.
Senate Appropriations Committee chair Sarah Anthony (D-Lansing) said it’s reasonable to want to cut fat from the state budget. But she warns there might not be enough money to go around for everything House Republicans are proposing.
“It may look like a little reduction on the balance sheet. That means that a veteran may not get services, or a child may not eat breakfast or lunch. And so, it's not just numbers on a balance sheet. We can always find efficiencies, but there are people behind those numbers,” Anthony told reporters.
During Thursday’s testimony, the non-partisan Citizens Research Council estimated the roads plan could leave a more than $2 billion hole in the state’s general fund.
Outman and other Republicans, however, argue the state budget has ballooned in recent years and could stand to shrink back down some without getting rid of anything critical. Aside from rolling back business incentives, plan supporters say money could come from spending less on special projects.
“We're not trying to drastically cut the budget, drastically cut public services. We're just trying to re-prioritize some of that money to fit this need,” Outman said.
Meanwhile, Anthony said she believes a sustainable roads plan would need to involve a combination of budget cuts and raising new revenue somehow.
Both Anthony and Senate Transportation and Infrastructure Committee Vice Chair Veronica Klinefelt (D-Eastpointe) said the Republican plan can be a conversation starter. Though they want to see House Republicans engage the Democratic-led Senate in what they describe as a more serious way.
“If you really want to get a package, you don't throw something out there and just start doing press conference after press conference, beating the heck out of the other side. That's not a good starting point for coming to the table and having a conversation,” Klinefelt told reporters in an apparent swipe at House Speaker Matt Hall (R-Richland Twp).
Hall has been critical of Senate leadership during his weekly press conferences, accusing them of a negative governing style and not presenting their own ideas.
Klinefelt and Anthony said conversations about what items in a roads plan could get out of the Senate are ongoing, even if they may not always be in the public eye.
Aside from concerns about the budget, Wednesday’s committee hearing also brought up concerns about how funding would be spread between communities. That includes criticisms of PA 51, a law from 1951 that lays the framework for how road funding distribution works.
Some Democrats raised concerns about how more populated areas wouldn’t benefit as much under the proposed plan without a change to the law itself too.
While testifying, members of the non-partisan Senate Fiscal Agency were asked whether the bills would exacerbate the situation where low population areas benefit proportionately more than high density areas.
“It’s not really addressing any inequalities that already exist in Act 51,” SFA economist Bobby Canell said.
But Republicans pointed out that Act 51 has been changed many times since coming into existence, disagreeing with its characterization as a haphazard policy. Outman warned against consequences of messing too much with it.
“When you talk about reforming PA-51, you're absolutely going to screw your northern colleagues. You're going to be peeling money away,” Outman said. “Let's inject billions of dollars into the overall system and satisfy everybody, not take money from somebody else. Let's adequately fund the problem and address everybody's concerns."
Still, it’s likely the legislation would still need to go through significant negotiations before it sees a Senate vote.
