Michigan exporing options to raise gasoline tax!

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!


From the Associated Press: (News Story HERE)

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.

I’m FOR raising the gas tax by a small amount IF THAT MONEY is guaranteed to go to road repair/replacement/etc.

Thoughts? Chime in!



Add a Comment
  1. I want good roads and safe bridges. A small increase (as long as it’s targeted to the roads) is fine with me. One of the best ways to boost revenue would be to eliminate the subsidy that big diesel trucks get on fuel taxes in Michigan. Also crack down on unsafe and overweight trucks that cause much of the damage in the first palce.

  2. Don’t we already have some of the highest state taxes on gas across the country?

    We don’t need even a small increase! The only creative thing that Granholm and the lawmakers have done in the past few years in this state is raise our taxes. Wow! My 6 year old could govern that way.

    Our leaders are not leading…..

  3. Considering the state was printing money just a short time ago. (Sales Tax = 18.5 prepaid, actual liability at $4 gas is 24 cents per gallon) There should be a huge surplus in the general fund that could be allocated to roads. If things continue on this path, I will be like soooo many other Michigan residents and become a non-resident.

  4. Raising taxes is one thing Jennifer doesn’t think to avoid, it’s the democratic way. Instead they should look at ways to reform the states spending!

  5. There are only so many ways to minimize state spending. I would love to see the GOP step up and post a public list on the ways they feel they can still cut back and pay for things while also providing basic essiential services.

    There is a point where taxes will have to be raised.

    Personally I would love to see taxes on gas handled similar to Wisconsin’s tax setup.

  6. Granholm’s crazy tax policies are part of why I am now an ex-Michigan resident. I loved the state but anyone can see the writing on the wall. The confiscatory tax and regulatory policies are driving jobs out of the area. If things don’t change soon Michigan will be a state full of retirees with a few health care workers and municipal employees left to keep the lights on. The last thing any struggeling economy needs is a tax hike. Michigan’s roads are crumbeling because of the goofy rules in what kind of material can be used to pave – there are materials far superior to concrete for making roads in cold weather climates, but due to union lobying, Michigan is required to pave a certain percentage with an inferior product. Support the unions and watch your highways turn into gravel due to the constant freezing and thawing. Raise taxes to make more gravel.

  7. Unfortunately TAX, TAX, TAX! is all we’re going to be hearing for the next 4 years and I’m already sick of it! I pay enough in housing, payroll, gasoline and household items. Let alone WALL STREET is getting my tax $’s because they became too GREEDY! If they actually used the funding for the roads instead of “turtle fences”, they may not have gotten so bad.

  8. Seems no one wants to pay for the highways we drive on. But let them get bad and the kvetching begins! The last governor did NOT put money into the roads and didn’t raise the tax either. Let them smile as they drive TODAY and when the roads go down the crapper I’ll be gone anyway.
    Its MUCH easier to maintain as you go rather than rebuild from the ground up. It takes MONEY to do that. It also takes MATCHING funds from the people of Michigan to get federal money. You don’t match the funds 49 other states are more then glad to take our money!
    Cutting taxes isn’t going to make it and raising them is about the only way to go. A little here, a little there would help a long way towards making roads and bridges better.
    I’m looking forward to the next president and the plans to spend real money on our infrastructure. Imagine what $700 BILLION would have done for highways, Amtrak, airports…the list goes on.
    If you have the money to putter away on your computer you can afford a higher fuel tax to pay for roads.

  9. I’d like to see some improvement to what they build our roads WITH!! We are not the only state with freeze and thaw issues and there are so many other states that have better roads than we do.

    Like to know what they’re doing with the money they’re collecting to fix our roads with now.

    Jenny – does she care if she raises our taxes?? Heck no, she’ll be moving to Washington if she has her way. Besides, she has already BLOWN MICHIGAN AWAY!!! I need to write a letter to Obama before he makes her an offer . . .

    I’d like to know why with oil prices still falling practically daily, gas stations raised their prices yesterday to $2.09 in a lot of areas. I commend those who did not. i was lucky at filled up at Sam’s Club on Tuesday night and won’t need gas again till the end of next week unless for some strange reason I decide to take a road trip or something – which I doubt since there is no “discretionary” money left to spend!!! LOL!!

  10. This is outrageous! Do our lawmakers actually believe that the gas prices will stay at this level???

  11. Dan, Dan, Dan,

    did you forget who has had control of the congress/senate? The Dems silly boy, no big bailouts without them. Blame Bush typical B.S.

    Higher taxes on anything in a down economy is a very bad idea – no matter what. ol mole face already raised taxes and guess what that equals, less revenue for the state. Cuz people moved and businesses left. Hello people!!

  12. Ray, Ray, Ray, your suggestion then? How do we as a state raise revenue to improve and rebuild our deteriorating roads? Or do you know a contractor who works for free?
    And I wasn’t blaming bush…although he is a moron…I blame a house and senate and engler for ‘no new taxes’ and then letting things deteriorate way too much. Now the chickens come home to roost and we have to raise money to fix it.
    And again…billions in Federal money is out there but needs a state match to get it. Should we toss even more potential moneis for improvements to another state? Don’t think so.
    Time to FACE THE SITUATION. Don’t throw a bucket of water on a house fire, call the fire department!
    Or we can let the roads turn into dirt tracks and then listen to everyone pitch a *itch. That won’t cost anything will it?
    And here is a proposition…put Michigan trucks into the same weight limits as the feds and other states have. Get rid of the 13 axles units we have and the 163K gross vehicle weight. Go to 5 axles and drop the GVW to 90K. You wanna hear some howling? Toss that one in the hat! Should do it and it would make the railroads in Michigan competative on shorter hauls again.
    No free lunch, no free rides either.
    Another idea…build roads as in Europe. Don’t give the contract to the lowest bidder, give it to the BEST BUILDER. Use the best materials too. Ever drive Das Autobahn? Nice stuff.

  13. And as for unions lobbying for certain building materials? Where did you get that one? Reading the GRPress last month it was the Mayor of Kentwood and a couple of republican house and senate folks that got the deteriorating part of M6 paved with asphalt instead of concrete materials. Do you think there is an asphalt union and a cement union? Ummm don’t think so but there is a Michigan Roadbuilders Association.

  14. Pointing the fault at a Gov from 2003 is just a bit of a stretch. Granholm has had PLENTY of time to do something- it’s been nearly 6 years. I see stupid pointless electronic billboards popping up, guardrail replacement (because shiny rails are so important since no one crashes into them), and other completely unnecessary road repair (I-96 in Marne, what a waste!)

    Also- there IS an asphalt lobby that is extremely active. Michigan Asphalt Paving Association DID LOBBY for (successfully) paving M-6 in asphalt from I-96 to M-37 and look at what happened there. News 8 recently reported MDOT found it already needs repair.

    I definitely agree with Dan on charging more taxes to trucks who are the near entire reason roads start to fail over time. I also agree with you on expanding rail- whatever happened there? Extremely cost effective and locomotives are very efficient. Sad that Americans have to have it there yesterday and can’t wait for things.

    Dan said “Seems no one wants to pay for the highways we drive on.” Where have the taxes been going that we pay to the state for gas taxes and sales tax on gas? EDUCATION. We desperately need to have an amendment to our state constitution to correct that. Furthermore, with the Dem controlled House active, they’ve been moving funds meant for road repair all around. I don’t mean to play the blame game- Engler and Granholm both spent about the same on transportation, around 8% of the State budget.

  15. Yes! Electronic billboards that show us that “No Problems Encountered” as we wait in a traffic jam due to a crash. The solari boards that go down every time it rains…in Iowa (sorta like our railroad signal system).
    MAP did get the mayor of Kentwood and a couple of senators and house members on their side to help with that lobby too.
    The guard rails get updated due to changing federal highway safety standards rulings.
    As for Granholm getting a chance to do something? If the mention of taxes come up they run screaming from the state legislature! Oh woe is ME! I gots no moneys! Just look at todays forum. Again everyone wants something for nothing. One persons pork is another persons perk. Its gotta be done and if NOTHING is done then things just continue on a downhill slide.
    Railroads can fill in, we are busy busy right now in GRR despite a downturn in the economy. Lottsa work and I can AFFORD to pay a lil higher tax. I don’t like it either but from a past job in the Kent County Road Commission (that was me leaning on that shovel) I know things need to be done and it isn’t cheap…unless you can get people to work for less, people to charge less and people to want and need less.
    Hopefully Amtrak will get fully funded again and new routes and expanded services can begin…that takes pressure off the roads somewhat. Then again thats tax money too.
    C’est la vie


  17. Dan – It has been proven time and time again revenues go up when you lower taxes (remember the great times during Clinton years – thank Ronald Reagan for that). Stop taxing the crap out of our businesses that supply jobs and pump mucho $$$ into our economy. Do you understand how the new business tax was an increase and tax on tax. Besides the winfall the state has had in gasoline sales tax, the state also cashed in on businesses. bologny they need to raise taxes for roads. I would be fine to drop the crappy business tax for a new gasoline tax – that would be far, then everyone has to pay.

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