That’s right- the State is thinking of raising gasoline taxes now that the price of gasoline has come down. With gasoline under $2, the State is exploring options to raise gas taxes. And to think- "In five years… you’ll be blown away"… with what, new taxes? Thanks Jennifer!
LANSING — Gov. Jennifer Granholm and lawmakers should consider eliminating Michigan’s 19-cents-a-gallon gasoline tax and replacing it with a tax on the wholesale price of gas, according to a report being released Monday.
Swapping the taxes would let revenues rise or fall with changing fuel prices rather than tying gas revenues to consumption, which is falling as motorists drive more fuel-efficient cars or cut back on buying gas to cope with prices that at one point topped $4 per gallon.
The change could boost transportation funding in the long run and might ensure that a bigger share of taxes paid at the pump actually go toward Michigan’s deteriorating roads, advocates say.
The recommendation is one of many listed in a Transportation Funding Task Force report set for release Monday. The Associated Press got an advance copy of the 85-page report.
"We may need to shift away from a 19th- or 20th-century tax on motor fuels," said Rich Studley, task force co-chairman and head of the Michigan Chamber of Commerce. He warned that the current system is becoming "obsolete."
The 13-member task force was created by a state law asking for recommendations to improve roads, bridges, airports and public transportation and come up with new ways to pay for them.
The panel, which includes four legislators — two Democrats and two Republicans — decided to pass up delivering a preliminary report due Oct. 31 and release the final report months ahead of schedule.
The report says Michigan must double its transportation spending and warns that one or two incremental fee increases won’t be enough to meet the need.
States have been struggling to find ways to raise enough money to fix crumbling roads and bridges and fund airports and public transportation. Gasoline sales nationally are down, so state and federal gasoline taxes are drawing in less money. Michigan continues to get back less in federal transportation dollars than it sends to Washington.
And tight budgets in recent years have led some states to put off critical work or inspections. That caused a tragedy in 2007, when the Interstate 35 bridge collapsed between Minneapolis and St. Paul, Minn., killing 13.
The Michigan task force did not recommend specific ideas over others. In listing options in order of how soon they could be done, it suggests:
- Increasing vehicle registration fees and eliminating registration discounts. The yearly registration fee declines for three years after a vehicle is registered.
- Converting or raising the 19-cent-per-gallon gas tax. Each penny increase would raise about $56 million. Converting the tax to one based on part of the sales price could eventually generate more money.
- Raising the 15-cent-a-gallon diesel tax to align it with the gas tax.
- Increasing the state’s 6 percent sales tax by a penny, to 7 cents on the dollar, and dedicating the extra money to transportation. This would require a state constitutional amendment.
- Redirecting all the sales tax on motor fuel taxes to transportation, which would require a constitutional amendment. Much of that money now goes to K-12 schools.
"We have laid the groundwork for the Legislature to see the needs clearly and then we have also laid out for them a litany of solutions," said Mike Nystrom of the Michigan Infrastructure and Transportation Association, a construction industry trade group.
Because tax or fee increases will be a tough sell to the Legislature and to consumers worried about losing their jobs and their houses, the report outlines how the increased spending would make life better for residents.
It says less congestion would save travel time, that smoother and safer roads would reduce vehicle maintenance costs and accidents, and that new jobs could be created.
"To grow our state, just like anything else, you have to invest in something," said Rep. Pam Byrnes, a Democrat from Lyndon Township near Chelsea who sits on the task force. "If your driveway crumbles, you need to patch it up or fix it."
Granholm and legislators are facing pressure to act.
In less than a year, state and local governments could lose $950 million annually for road projects because they won’t be able afford to put up the money required to get matching federal dollars.
Yet a short-term fix such as raising the gasoline tax would be tough politically and may not provide stable funding in the long term. The state last raised the tax in 1997.
Despite the recent drop in gas prices, the cost to fix roads and build new ones is climbing. Asphalt costs more, as does road equipment.
One future solution might be a high-tech toll system that charges drivers for the roads they use.
Motorists wouldn’t have to contend with collection booths. Instead, ID tags on vehicles would be tracked as they pass through intersections or ramps to enter and exit the toll system. Computers would calculate usage on a pennies-per-mile basis and bill motorists monthly.
Michigan doesn’t charge tolls except for the Mackinac Bridge and some of the crossings into Canada. Motorists might object to having their driving monitored in that way. But some say the technology may be worth trying.
"This is the wave of the future," said task force member Ann Jousma-Miller, who also serves on the Michigan Commission of Agriculture. "This is the type of thing we all need to look at."
Fantastic! Although we need more money for roads badly, I have a feeling that unless there is an amendment to the State Constitution, most of this money may end up in the General Fund.