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Snyder proposes 7-percent sales tax for roads

December 18, 2014
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Michigan ranks last in state per-capita spending on roads and bridges, based on 2010 U.S. Census Bureau data, according to the Michigan Infrastructure Transportation Association. Photo via

LANSING — Michigan voters would be asked to approve a 1-percentage-point hike in the 6-percent state sales tax as part of an estimated $1.6-billion road- and school-funding deal announced today by Gov. Rick Snyder and legislative leaders.

Road to a public vote

The Republican-led Legislature is expected to vote on the plan later in the day, the last of the two-year session. A statewide vote would occur in May if two-thirds of the House and Senate okay the proposed constitutional amendment.

It would ask voters to raise the state sales tax to 7 percent, drop the sales tax on fuel and ensure that school aid fund revenue could go to K-12 districts or community colleges and not universities.

Transportation funding would rise by $1.3 billion a year, giving a big boost to the $2 billion collected through fuel taxes and license plate fees. And annual school funding would jump by at least $300 million.

"We have a solution that really takes into account key concerns in a very bipartisan, bicameral fashion. We listened to everyone," the Republican governor said at a Capitol news conference, where he was joined by top lawmakers who had been meeting behind closed doors for days.

He acknowledged that a ballot only road-funding fix is "challenging," because voters could defeat it, but said, "Isn't it good we asked our citizens to participate in the process in a constructive way?"

Related tax bills

Also today, lawmakers will vote on a number of related bills, many of which would not take effect unless the ballot measure is passed by voters.

They include converting the flat 19-cents-a-gallon gasoline and 15-cents-a-gallon diesel tax to taxes that could rise with wholesale fuel prices, to help address declining revenue as people drive less and with more fuel-efficient vehicles. The base fuel tax would be significantly increased above current levels, though it would not be a major net tax hike, because the sales tax on fuel would go away.

Low-income earners who lost a $260 million tax break in a 2011 GOP business tax overhaul would see it restored. That would mean about $300 more per family.

Other bills — not tied directly to the ballot proposal's fate — would force Amazon and other online retailers to collect the sales tax on Internet purchases, a bid to level the playing field for brick-and-mortar businesses that must assess it. That would generate at least $50 million more a year.

There also would be a $95-million increase in vehicle registration fees and overweight truck fines, $45 million through license plate fee changes, if the ballot measure is okayed.

"Taken as a whole, this is an excellent package," said House Minority Leader Tim Greimel, an Auburn Hills Democrat.

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