Lawmaker offers proposal to repeal Michigan's gas tax

A trio of tie-barred bills have been introduced in the state Senate that would change the mechanism by which roads are funded. If one of them receives the state Legislature’s blessing, voters may see the initiative on the 2012 general election ballot.

State Sen. Howard Walker (R-Traverse City) introduced Senate Joint Resolution (SJR) N on Tuesday, Oct. 4, seeking to amend Section 8 of Article IX of the Michigan Constitution by imposing a 1-percent sales tax on gross taxable sales of tangible personal property by retailers.

The revenue would then be dedicated to the state’s Comprehensive Transportation Fund.

“The bills were introduced because the gas tax (revenue) coming in continues to decline,” said Eric Dean, Walker’s chief of staff. “People are driving less and going on fewer vacations due to the economy. With the fuel economy vehicles, less gasoline is needed, so the trend will continue into the future. We need a more stable funding source, and the sales tax provides that stability.”

Senate Bills (SBs) 714 and 715 seek to repeal the Motor Carrier Fuel Act, should the electorate vote in favor of the resolution at the polls.

It is uncertain how new legislation would impact the Road Commission for Oakland County (RCOC) given that state revenues — derived primarily from the state-collected fuel taxes and vehicle-registration fees — are the road commission’s largest source of funding and the main funding source for RCOC operations.

“No. 1, we understand the legislation is intended to be revenue-neutral. While we don’t want to lose money, it doesn’t solve the funding problem for roads,” said RCOC Spokesperson Craig Bryson.

“One concern we have, however, is that the gas and diesel tax, and registration fees, are constitutionally guaranteed. If replaced, we’re not given a guarantee, and if the budget gets tight, the concern is they could pull it and use it for the general fund,” Bryson said.

However, Dean contends that the funding mechanism would be air-tight.

“This would be constitutionally-dedicated to the Michigan Transportation Fund and couldn’t be diverted for other purposes,” Dean said.

According to Dean, an analysis done in February shows the state’s gas tax yielded $826 million in Fiscal Year (FY) 2010-11 and the diesel tax netted $115 million for a total of $941 million. This pales in comparison to the $1 billion in revenues the 1-percent sales tax would generate, as revealed at the 2011 Consensus Revenue Estimating Conference, Dean said.

Sen. Dave Robertson (R-Waterford) said he isn’t ready to take a stand on the legislation.

“I’m not inclined to support a tax increase or take a position before hearing testimony in committee,” he said. “My focus is on cost containment in transportation and getting more road value for the dollar.”

Robertson noted that the state should be pushing for more federal tax dollars.

“We only get 92 cents back from every federal tax dollar (sent) — we’re still a donor state,” he said. “I’d like to see the federal funding changed. We have helped other states so its their turn to help us.”

By repealing the gas and diesel tax, stakeholders would save at the pump — another benefit, according to Dean.

“It would provide an immediate reduction at the pump of 19 cents for each gallon,” Dean said, adding that the legislation is a new take on how to fix roads while not penalizing the voters with a new tax.

“We’re hopeful that as we work through the process, folks will see (that) the proposal provides stability without a tax increase that some legislators have called for,” Dean said.

The tie-barred bills are currently in the hands of the Senate Finance Committee.