Legislature Tackles Roads Before Summer Break

Last week, the Michigan Senate recessed for the summer after having passed its road funding plan.  The Senate acted by largely amending  the House road funding bills passed by that chamber a few weeks ago. After hours of deliberation, the eight bill package was voted on and passed by the chamber. Two of the main bills in the Senate package, House bills 4615 and 4616, came down to a 19-19 vote , so Lt. Governor Calley cast the deciding vote in favor of the bills. 

The bills now head back to the House for further consideration and a possible concurrence vote. Leadership in the two chambers, along with Governor Snyder, will now meet over the summer to negotiate a final road plan as a compromise between the two bill packages.

The two packages are vastly different in their approach to providing more funding for roads. While the House plan primarily relies on existing revenues and budget cuts in the state budget for increased road funds, the Senate plan is based on a $.15 increase in the state fuel tax. Details of the two plans are:

House Road Funding Plan

• Twelve bill package.
• $1.16 billion in annual revenue.
• Revenue sources include:
• An earmark of a portion of the Individual Income tax and Sales tax – an estimated $75 million in 2015;
• A redirection of $75 million  from the MEDC's 21st Century Fund and $60 million from the Michigan Strategic fund to the Michigan transportation fund;  
• Elimination of the 6% Earned Income Tax Credit beginning with the 2015 tax year -currently estimated to generate $115 million in revenue in 2015;
• Elimination of the $50 million Michigan Film Credits; and
• Increase in the diesel fuel tax to $.19, the hybrid vehicle registration fee by $30, and the battery electric vehicle registration fee by $100.

Senate Road Funding Plan

• Eight bill package.
• $1.4 billion in revenue.
• Revenue sources include:
• A $.15 increase in the state fuel tax over a three year period, with annual increases of 5% or amount equal to the U.S. Consumer Price Index each year thereafter.  The fuel tax would also apply to alternative fuels, at a rate of $.15 beginning January 1, 2016 for commercial users, and January 1, 2017 for non-commercial users; and  
• Redirection of income tax General Fund dollars to road funding: $350 million for fiscal year 2016-17, $700 million in each fiscal year thereafter, until 2032-33. 

If you have any questions about the subject matter of this e-alert please contact Ashley Ligon at aligon@clarkhill.com or 517.318.3064 or contact another member of Clark Hill's Government & Public Affairs Practice Group.