As negotiations over the state budget ramp up in the Michigan legislature, lawmakers are mulling a number of different options on how to get more money towards roads, ranging from gas tax increases to letting local governments go to voters for additional revenue.
Currently, high-level budget talks are primarily taking place between House Speaker Lee Chatfield, R-Levering, Senate Majority Leader Mike Shirkey, R-Clark Lake, and Governor Gretchen Whitmer, and no formal compromise plan has been presented to lawmakers.
A key sticking point is what to do about road funding – a top priority for Whitmer, whose proposed 45-cent gas tax increase didn’t sit well with either House or Senate Republicans.
On Tuesday, senators met briefly for session before Senate Republicans held an offsite caucus. The House is scheduled to return to full session next week.
There’s currently “no big, bold plans” for a budget or road funding compromise Sen. Wayne Schmidt, R-Traverse City, who told reporters Tuesday there are “plenty of ideas out there.”
“We’re not there yet,” said Schmidt, who chairs the Senate Appropriations Transportation Subcommittee. “Is it going to be a tax increase, is it not going to be a tax increase – these are things that are all being discussed, but there’s no specific plan out there.”
Any tax increase for infrastructure could be a tough sell among House Republicans, whose budget proposed a transition away from collecting sales tax on gas and using all that money for infrastructure repairs, but did not call for any new outside revenue.
The Senate-passed budget called for accelerating the 2015 plan passed by the legislature to fund Michigan’s roads by putting an additional $132 million into local roads, but also avoided the prospect of a tax increase.
Shirkey spokesperson Amber McCann said the majority leader is continuing to review policy options and has plans to speak with Whitmer and Chatfield again soon. In a recent interview on WJR-AM radio, Shirkey said he anticipates a joint announcement “on a general direction” from House, Senate and the governor’s administration in the coming weeks, and said progress is being made on the budget and on creative ways to address roads.
House Appropriations Transportation Subcommittee Chair Matt Maddock, R-Milford, played a key role in crafting the House budget, which calls for transitioning all taxes collected at the pump to go towards infrastructure funding, instead of the current system which includes gas in the state sales tax.
The House budget plan assumes all the funds currently collected as sales tax on fuel – which largely goes towards schools and local governments – would be shifted to roads over the next two fiscal years, ultimately generating an estimated $830 million. In an effort to maintain existing funding for schools, the overall House plan shifts school aid fund dollars out of the university budget and back into the K-12 budget.
Maddock said he’s not a fan of most of the other ideas he’s heard floating around the legislature, and remains firmly opposed to raising taxes, noting lawmakers should “put the emergency brake on” before approving another tax increase that he says Michigan voters don’t want.
“Everything’s a rush in Lansing when it comes to spending money and increasing taxes, and I think that’s very unfortunate,” he said. “If there’s a dozen different pieces on the chess board, I hope the king piece is going back into our budgets, identifying and finding the money in Lansing and using that money to fix our roads.”
Another option some House Republicans are floating is to give local governments more flexibility to raise their own fuel excise taxes or local registration fees by putting it on the ballot, similar to a property tax millage. House Transportation Chair Jack O’Malley, R-Lake Ann, said he’s preparing to introduce legislation to that effect next week.
O’Malley said offering a local option could ease some pressure on state coffers while also letting individual communities decide how much they want to spend on infrastructure.
“I think that’s a part of this discussion that Lansing and the state has not paid attention to, because everybody’s ‘Budget, budget, budget, budget, budget,’” O’Malley said. “It’s important, but how we spend that money is hugely important, too.”
Rep. Aaron Miller, R-Sturgis, likes that concept, calling it one of the best ideas he’s heard regarding new road funding. But he acknowledged that once a general direction comes from House and Senate leadership, getting rank-and-file legislators to agree could be “like herding cats.”
“We’ve got many people going in different directions,” he said, adding that the ultimate fate of a road funding plan “absolutely just depends on where the willingness is and where the consensus is.”
“I’m sure we could get the budget done, safely land that plane on the runway” in time, he said, but noted it might take longer to hammer out a consensus roads deal.
The $56.8 billion budget signed by then-Gov. Rick Snyder on June 21, 2018 is set to expire Oct. 1, when the new fiscal year begins.
If a budget isn’t agreed to before then, the state government would go into shutdown, although Gov. Gretchen Whitmer signaled last week she’d consider a stopgap measure to continue government funding past that date if “good-faith” negotiations about road funding were underway.
Another perspective brought before the legislature by the West Michigan Policy Forum on bonding money to fund teacher pension obligations, then paying back the bonds on a set schedule, is being considered as a possibility to free up additional money that could be used for roads.
Former House Speaker Jase Bolger, an adviser for West Michigan Policy Forum, said the group proposed the state issue a 30-year, $10 billion bond to pre-fund the Michigan Public School Retirement System, a move that could free up between $600-900 million a year.
Whitmer was cool to that concept, however, telling reporters the idea was “maybe retrieved out of Gov. Snyder’s trash can,” according to Crain’s Detroit Business.
Lawmakers continue to face public pressure from business, local government and industry groups to come up with a roads deal.
During a Tuesday press conference, the Michigan Chamber of Commerce and others called for an uptick in transportation funding that fully funds the state’s infrastructure needs by Oct. 1, the start of the next fiscal year.
“We believe that this is a multi-billion dollar problem that needs a real solution, a substantial investment in crumbling roads and bridges,” said Rich Studley, president and CEO of the Michigan Chamber of Commerce. “Imaginary, hypothetical solutions that will take years to implement and we hope might work are nice to talk about over the summer, but we need a real solution to areal problem, and we really need it right now.”
Lance Binoniemi, vice president of government affairs for the Michigan Infrastructure and Transportation Association, said he’s been encouraged by the direction of the talks, including Shirkey’s acknowledgement that some new revenue will likely be needed after addressing any re-prioritization that can be done and the House’s call for all taxes at the pump to go towards roads.
“I’m hopeful the Republican leaders can come up with some necessary new revenue,” he said. “All three of the individual leaders are serious about investing more into our roads…they all honestly want to have a solution on the table.”