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Michigan Senate amends bill to double fuel taxes

Published on NewsOK Modified: May 21, 2014 at 7:35 pm •  Published: May 21, 2014

LANSING, Mich. (AP) — The Michigan Senate set the stage Wednesday for a potential vote on a plan to raise $1.5 billion more a year to fix deteriorating roads, primarily through a significant hike in fuel taxes paid by drivers.

The chamber revised a House-approved transportation funding plan but stopped short of voting until next week, to see if majority Republicans and minority Democrats can strike a bipartisan deal to boost what often is seen as a third rail in politics: gas taxes. Democrats, for instance, want assurances that Michigan's minimum wage will be increased.

Key elements of the Senate plan would:

— Calculate per-gallon taxes on fuel prices starting next January. The tax would start at 9.5 percent, effectively increasing the state's 19-cents-a-gallon gasoline tax by 10 cents and doubling the 15-cent diesel tax assuming the statewide average wholesale price of gas is $3. The gas tax would rise to 11.5 percent (around 34 cents) in 2016 if prices stay intact, 13.5 percent (40 cents) in 2017 and 15.5 percent (46 cents) in 2018.

The tax could rise or fall no more than 5 percent in future years to account for any major year-to-year fluctuations in price. A penny increase in fuel taxes generates $50 million in additional revenue.

— No longer allow license plate fees, which are based on a percentage of a vehicle manufacturer's suggested retail price at the time it is first titled, to drop by 10 percent each year for the first three annual plate renewals, generating $145 million more.

— Permanently dedicate a portion of the 6 percent sales tax at the pump to roads, bridges and public transit, setting aside $192 million more by taking it from the state's general fund.

"If we don't do something about the roads this year, we're shirking our responsibility," said Senate Majority Leader Randy Richardville, R-Monroe. "We were sent up here to lead and to take on tough issues. I think that we're ready and people are going to step up to the plate."

But there is no guarantee the Senate, where 26 of 38 members are Republicans, will support a major tax hike.

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