Michigan Gov. Gretchen Whitmer’s proposed gas tax would catapult Michigan into first place for the highest fuel tax in the country.
Whitmer made fixing Michigan roads a priority in her gubernatorial race, but her proposal faces serious opposition from Republicans, who promised to shoot down Whitmer’s proposed 45-cent-per-gallon gas tax.
“We’d have the highest gas tax and the highest auto insurance. It’d be laughable if it wasn’t the governor of the state proposing it,” Representative Eric Leutheuser, District 58, said. “It’s 100 percent the wrong solution for Hillsdale County or any rural parts of the state — which is 90 percent of the state.”
Michigan drivers currently pay a 26.3-cent per gallon state fuel tax, as well as the 6 percent state sales tax — placing Michigan in sixth place for the highest total pump tax in the nation.
Michigan still spends less on highways compared to other states per capita, and the condition of Michigan’s roads merited a D- from the 2018 American Society of Civil Engineers.
Whitmer’s plan would raise fuel taxes incrementally, beginning with a 15-cent tax on the first of October, and adding another 15-cent tax in April and in October of 2020.
This would raise $2.5 billion in gas taxes per year, but it would only increase road funding by $1.9 billion. That’s because her proposal dismantles part of the 2015 road deal, which dedicated $600 million from the income tax to the transportation fund.
The 2015 road deal promised to raise $1.2 billion to fix the roads by 2021. It is phasing in fuel tax and registration fee increases, as well as funnelling $600 million from the general fund into fixing the roads each year. It was supposed to raise roughly $880 million this year.
Whitmer argued that the 2015 plan only slowed the decline of the roads instead of actually fixing them.
“We have the worst roads in the country, and I am proposing a plan that will permanently fix our roads while keeping the costs fair for seniors and low-income families,” Whitmer said in a press release. “I know this won’t be easy, but with one historic vote we can make the investments that are necessary to finally start fixing the damn roads.”
Whitmer’s proposed tax would charge drivers an extra $600 per household, according to Mackinac Center’s Director of Fiscal Policy James Hohman.
“The people of the state will never ever support a 45 cent gas tax hike, so their representatives in the capitol are no going to support it either,” said Speaker of the House Lee Chatfield’s spokesperson Gideon D’Assandro. “This plan is not going to happen, and rightly so. It’s a non-starter.”
In 2018 the legislature funneled an extra $357 million surplus general funds into repairing the roads. Michigan Transportation Department officials have argued that the funding isn’t nearly enough to repair crumbling roads.
Gas taxes put the burden of maintaining the roads on the drivers who use them, but average drivers aren’t necessarily the ones causing the most damage. Michigan doesn’t impose weight-distance taxes on heavy trucks, which is one way to avoid hefty taxes at the pump, said Hillsdale College Professor of Political Economy Gary Wolfram.
“The gas tax is a decent mechanism for combining the use of public infrastructure with the payments needed to keep it up,” Wolfram said. “The gas tax is a mechanism that links the use of the roads to how you pay for it. If you drive a lot of miles and use a lot of gasoline and wear out the roads, you should pay more than the person that just rides their bicycle.”
But Republicans cararictured Whitmer’s budget as an income tax hike in disguise.
Wolfram worried that Whitmer’s plan drains money from the transportation fund. While imposing a fuel tax to fix the roads, her plan would shift $600 million in annual income tax revenue away from the transportation fund, freeing funds for her other budget priorities. Wolfram compared her plan to the Michigan lottery debacle, in which legislators promised to funnel lottery taxes into the School Aid Fund but then siphoned away money from the General Fund into other projects.
“It’s going to be a tough sell to raise taxes by $2.5 billion to spend an additional $1.9 billion on the roads,” Hohman said. “That discrepancy between what you’re calling for in actual road spending and what you’re raising in taxes is a problem.”
Despite calling Whitmer’s plan a “disappointment,” Republicans said they remain invested in fixing the roads.
“Everyone is interested in additional investment to help fix the roads, the question is what exactly that looks like,” D’Assandro said.