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City Hall lauds proposal for higher gas tax

May 30, 2014
| By Pete Daly |
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An increase in the gas tax as proposed in the Michigan Senate could mean an additional $7.5 million of state funding per year for road repair in Grand Rapids, according to a statement issued by Grand Rapids City Hall.

On a statewide basis, it could represent at least $1.5 billion annually in new revenue for the state transportation system.

“If the package of bills passes in the Senate and House, and is signed by the governor, this new funding will accelerate Grand Rapids’ vital streets efforts and help get us closer to 70 percent good-and-fair streets” ahead of the 2030 target date, said Grand Rapids Deputy City Manager Eric DeLong.

The proposal would repeal the 19 cents per gallon flat tax and replace it with a percentage tax, increasing over four years. The first would be 9.5 percent beginning Jan. 1, 2015, then 11.5 percent beginning Jan. 1, 2016, and 13.5 percent Jan. 1, 2017. On Jan. 1, 2018, the rate would increase to 15.5 percent.

The new tax based on price is estimated to at least double the revenue currently raised.

Another bill, HB 4630, would repeal current law that gives buyers of new vehicles a 10 percent discount in registration fees for three years. It is estimated that could yield about $140 million to the state.

The Grand Rapids Sustainable Streets Task Force determined that a total investment of $22 million per year is needed over the next 15 years for Grand Rapids’ streets to be fixed and maintained. City voters on May 6 overwhelmingly approved an extension of a temporary increase in the city income tax for another 15 years to generate an estimated $9.9 million per year to restore “vital streets.”

“The Senate’s action comes at the right time of economic recovery for the state. Road conditions in Michigan have gone from bad to worse,” said Grand Rapids Mayor George Heartwell.

“Investment in the state’s road infrastructure, including transit, is critical for continual economic recovery of our state and urban centers. We encourage the Senate, House and administration to work and complete the Senate plan before the legislature adjourns for the summer,” said Heartwell.

When asked how City Hall arrived at an estimated figure of $7.5 million in additional state funding for GR streets, DeLong said it is based on the Michigan Public Act 51 formula for distributing gas tax and vehicle registration revenues for local street projects. This year Grand Rapids got $836,000 from the state’s $100 million supplemental appropriation for winter road maintenance; the Senate proposal would generate approximately $1 billion in its first year.

In FY2014, the city estimates it will get $13.3 million in Act 51 payments, although it is only able to allocate $566,000 for capital projects.

With the city income tax increase just approved, and the Senate proposal for an increased gas tax, Grand Rapids would be getting the full $22 million per year it says is needed to fix city streets.

None of the additional funding would be available until next year.

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