Rather have Whitmer raise prices than Speedway

Tuesday, March 12, 2019, Noon: Big Red’s aggressive defense of margins continues, as we saw a hike to $2.69 yesterday. Over the weekend, there was more chatter about Chicago wholesale prices, but I didn’t they would act this fast on Monday. If something (unlikely) happens with another refinery this week, we could be facing another hike, but I’m not expecting it.

Instead, I’d like to discuss Gov. Whitmer’s gas tax hike proposal. Here’s the issue — due to our freeze/thaw climate, our roads take a bigger beating than roads in, say, Texas. For other Big Ten states like Wisconsin, is it the same? Or is it worse in Michigan due to being surrounded by several Great Lakes? If it is worse, then we would have to spend more per mile than other states to maintain our roads.

Four year ago, I wrote a long posting on my blog comparing spending on Michigan roads with other Big Ten states. We were in the middle of the pack, and we weren’t getting our fair share of Federal dollars for roads, either. Maryland is at the top of the list, and I was there recently. They have good roads. I suspect things haven’t changed, and if that is the case, then we do need to raise the gas tax or find some other ways to properly maintain our roads. So, what is the best gas tax per gallon to do that? -EA

Updated: March 12, 2019 — 12:42 pm

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  1. I think the question that needs to be asked first is this: Have 100% of the previous road improvement taxes actually been used for road improvement or has some of that money been siphoned off for other uses? If the state can’t prove that they have spent 100% of that money on actual road improvements, then “NO MORE TAXES FOR YOU!”

    The second question that needs to be asked is this: Will 100% of THIS tax increase be ADDED to the current amount of spending on roads or will some of the current spending be siphoned off to other things? If the overall spending on roads does not increase by the amount that this additional tax raises, then “NO MORE TAXES FOR YOU!”

    Having watched politicians in action for most of my life, I’m fairly certain the proper answer is “NO MORE TAXES FOR YOU!”

  2. Michigan just raised the gas tax a couple of years ago, along with increased registration fees, that was supposed to get more money for the roads ($1.5 Billion per year extra!). But I think that money isn’t hitting the budgets until 2020. So let’s just calm down and let that money go to work first.

  3. I concur that the roads are bad, in Michigan, but the worse roads are in the cities. The Michigan Governor, wants these funds to mostly go to repair Freeways, and state highways, which are in better shape, in my opinion. The Feds help out with freeway repairs, so the state money share goes further.
    I have heard the dirty little secret that the truckers do not want you to know, is that one fully loaded truck, makes the same damage as 50,000 cars. Also, a lot of the trucks come in from out of state, with cheaper non-Michigan fuel in them, and do not fuel up while in Michigan. Why are they not paying their fair share, or reduce the weight limits, so we have less damage, and some fuel tax from them, to fix our roads? Our Economy, so that Michigan jobs are not effected. There are a lot more cars, and SUV’s to tax, and they mostly buy their fuel in Michigan, not out of state….
    I just wish that they fix the roads right, and by putting extra rebar, and increasing the thickness of the concrete, by 2 inches, with double tar strips between sections, they can double the life of a road, with only a 10% increase in cost. With our Michigan winters, we need to do it….But, Michigan lawmakers are not interested in 15 to 20 years down the road. They are only worried about their next election!

  4. Yikes, Greg, you’re up early! Or, late to bed?
    I read recently of a Republican plan to keep the vehicle registration monies in the county in which they originate. Democratic Whitmer has appeared to take that under consideration so it’s possible that plan will get some traction. That would put more dollars in the counties with the heaviest amount of vehicles. The current plan favors rural counties since all monies get equal distribution.
    I wrote on the last post that virtually everyone agrees that a minimum of $2B/year is needed to start to bring the road and bridges up to par. That’s where the .45/gal figure comes in. One plan to lessen the pain at the pump would be to remove the 6%/gal. sales tax now being paid but that would create a shortfall in K-12 funding as well as a lesser amount going to the General Fund and Revenue Sharing. I suspect that the Legislature will support some increase but not that top number.
    The previous Governor embarked on a plan to increase funding with a three stage increase in the gas tax, 20% uplift in vehicle registration plus a generous donation from the General Fund. That plan isn’t supposed to be fully realized for another year or two.
    Additionally, the recently passed legalization of recreational Marijuana is initially anticipated to add $140M to School Funding and around $63M to Roads. That would help fill the hole in K-12 funding if the sales tax removal but the $63M is not exactly a significant contribution to the roads.
    The bottom line is that the infrastructure has been neglected too long. Hopefully any part of an increase in the gas tax will include placing some sort of guideline on the way the roads are built, as you mentioned Greg, and place the liability on that end of the construction so that we can be assured of a higher quality of road.

  5. Need to have tolls at the gateways of all freeways entering or leaving Michigan. I-94, 131, I69 127, U23 and I75. Port Huron and Detroit gateway and potentially at the bridge or US2 (don’t care about the UP, just give them some year round road salt and call it good) Don’t care if its a dime or quarter, but Chicago, NY, PA have them and I think if they were here, it would be a small shake down to truckers and the out of state travelers. If you are a Michigan resident, No Charge!

    I would rather have that than another .45 gas tax….Times are good with the world wide price of fuel, what happens if market conditions put the going rate for gas at $4.00 per gal as the new norm adding in to roughly an additional $1.00 in gas tax….People don’t think about a scenario like that, but they will see that $4.00 mark and think they live in California.

  6. South Bend IN – Family Express leading the charge to $2.69 last night (one at $2.71), other brands beginning to follow. No spike from Speedway just yet.
    Costco $2.24

  7. Many stations SE of Ann Arbor are down to $2.35 after hitting $2.69 several days ago.

    As far as tolls, that can’t be done with Interstates. Federal law prevents it.

  8. Nearly everyone to 2.65 in Indy yesterday. I lucked out and found Murphy USA still at 2.25 and got a much needed tank to hold me over.

  9. Greg531 – Out of State Trucks already pay for the mileage that they travel in Michigan through the IFTA (International Fuel Tax Agreement). They have to report miles traveled in each state and pay the appropriate taxes. Trucks also pay HVUT (Heavy Vehicle Use Tax). In addition, most of these heavy trucks are rolling on Class A roads, not down neighborhood streets. Lost of the damage to local roads and streets is done by garbage trucks, they run near the edge of the road and are quite often heavier than they look. Please keep in mind that reducing the weight that truckers can haul and increasing the taxes on them increases the cost of the goods that they are hauling, at both the gas station and the superstore. Truckers are already heavily regulated as to weight, hours of service and equipment inspection requirements in addition to the fuel taxes that they pay on the diesel that they buy (often for a vehicle that gets 5-10 mpg!). If you drive 1,200 miles a week and buy 50 gallons of gas (24 mpg) at $2.859, you are paying $13.15 in MI gas Tax, $7.35 in MI sales Tax and $9.73 in Federal Tax & environmental fees. That same 1,200 miles driven by the guy hauling fuel to a gas station would take 240 gallons of diesel (5 mpg) at $3.099 would be $63.12 in MI gas Tax, $38.52 in MI sales Tax and $61.12 in Federal Tax & environmental fees. The real problem is that we have traded good roads for tax breaks and kicked the can down the road for years. The can is now lost in a pothole.

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