Minority Leader Matt Hall (R-Richland Township)’s proposed $2.7 billion road funding plan has been met with invitations for further discussions from the Governor, Senate Majority Leader and House Speaker, agnosticism from infrastructure groups and apprehension from school groups.
Although the Governor has campaigned on and said many times she’d like to “fix the damn roads,” Hall is the first caucus leader this term to lay out how he’d like to see it happen.
“Everyone says they want to fix the roads when the cameras are on, but nobody has taken any real steps to do it these past two years,” Hall said in a press release.
Hall is suggesting $1.2 billion of corporate income tax (CIT) revenue be allocated right off the bat to infrastructure with designs to add the remaining $600 million in 2026. Like former House Speaker Lee Chatfield, Hall wants to remove the sales tax on gas but give the motor fuel tax a “corresponding revenue-neutral increase” that would be worked out in a way that wouldn’t divert funds from the School Aid Fund (SAF).
Local roads are part of this plan too, with the most resources of the initial $1.2 billion going to those local road agencies, the press release says, all without raising revenue.
However, sales tax on motor fuel is a revenue source that currently benefits the SAF, and the proposed exemption leaves school groups apprehensive and awaiting more clarity on how education funding would be back-filled.
Hall’s proposal reads: “The plan would also hold school funding harmless from the decrease in sales tax revenue,” but school groups will believe it when they see it.
House Speaker Joe Tate (D-Detroit) said in a statement that he’s glad to see Hall thinking about road funding, and that he’s more than happy to have a discussion with him about solutions.
“Let’s have that conversation. It’s a priority for the people of Michigan, and so, of course, it is a priority for me to keep that dialogue open,” Tate said.
Stacey LaRouche, press secretary for Gov. Gretchen Whitmer, gave the following statement, as well:
“Governor Whitmer is committed to fixing the damn roads and bridges across the state. By the end of this construction season, we will have rebuilt or repaired nearly 23,000 lane miles and 1,600 bridges, supporting 118,000 jobs. We agree on the need for a long-term funding solution, and Governor Whitmer will work with anyone who is serious about getting things done.”
Senate Majority Leader Winnie Brinks (D-Grand Rapids) told MIRS that Democrats have worked hard to repair roads and other infrastructure in the last two years, and she appreciates Hall’s recognition of the need to continue the investment.
“Fixing our roads has been an ongoing, bipartisan challenge for decades in this state, and it’s going to require serious bipartisan collaboration and solutions. My Senate Democratic Caucus and I are ready to work together to keep improving our roads in all parts of the state, whether it’s today, next month or next year,” Brinks said.
None of them commented on the methods Hall suggested in his plan.
Lance Binoniemi of the Michigan Infrastructure and Transportation Association said the group is agnostic on the policy, but they are “really excited” that one of the legislative leaders has come up with an actual proposal.
Peter Spadafore of the Michigan Alliance for Student Opportunity (MASO) said in a statement that MASO appreciates the attention road funding is getting, but as always, it remains cautious about any proposal that doesn’t make clear how that nearly $1 billion would still be generated for schools.
“Michigan’s students cannot afford a solution that simply shuffles the deck and takes resources away from public education … any policy that diverts funding from the classroom would be devastating to districts, teachers, and the over one million students whose futures depend on a well-funded education system,” Spadafore said.
At this point, Hall is still exploring options for back-filling the SAF, a source tells MIRS. Until that path is paved, it’s likely that school groups won’t hop on board.
This approach is similar to what Chatfield pushed forward in which the 6% sales tax on gasoline would be phased out. Chatfield suggested raising the gas tax to offset the difference, but Hall hasn’t been specific on whether that would be his preferred direction.
The $600 million that was mentioned earlier would be dedicated in FY 2026, and would replace the allocation of $500 million for the Strategic Outreach and Attraction Reserve Fund, $50 million for the Revitalization and Placemaking fund and the $50 million for the House and Community Development fund. These allocations end with the FY 2025 budget.
Mitch Bean of Great Lakes Economic Consulting said a strong case can be made for the need for the additional $2.7 billion for roads, but Hall’s plan is redirecting existing revenue as opposed to raising new revenue.
Dedicating Corporate Income Tax will come at a cost to the General Fund, which begs the immediate question of “what are you going to cut to balance the budget,” as is constitutionally required, he said.
In terms of replacing the sales tax on gasoline with a revenue neutral charge on gasoline, as has been proposed by prior Republican House Speaker Lee Chatfield, the question is repeated. If the plan keeps the School Aid Fund revenue neutral, what is being cut from the General Fund to prevent cuts to schools, Bean asked.
“Where is your offset?” he asked. “We’re not the federal government. We can’t print money.”
To that, House Appropriations Committee member Phil Green (R-Millington) said, “I hope Mitch Bean won’t require us to keep digging pools for schools and building little league baseball fields. There is so much pork in the budget that cutting $1 billion is a no-brainer.”
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
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