Snyder wants to raise gas tax, expand Medicaid

The Republican's $50.9 billion spending plan, which needs approval from the GOP-led Legislature, also calls for a bigger state police force, more spots in preschool for at-risk kids and a modest funding boost for public education.

Snyder said it is a responsible, balanced budget that reflects Michigan is "turning the corner" after a decade of job losses. He cautioned that the state is not out of the woods given fiscal problems in Washington and in some struggling Michigan cities and schools.

"We're building a long-term path to financial stability and success," he told lawmakers who sit on House and Senate budget committees. "Too often when we tend to come out of a recession, it's easy to go back to old habits."

Most of the increase over the current $48.2 billion budget is in two areas: transportation and Medicaid, the government health insurance program for the poor and disabled.

Snyder proposed increasing the 19-cents-per-gallon state gasoline tax and 15-cents-per-gallon diesel tax to the equivalent of 33 cents for both — a more detailed plan than announced in his January State of the State address. After two years, the fuel tax would begin fluctuating depending on fuel consumption and construction.

Annual registration fees would rise 60 percent for cars and SUVs and 25 percent for big trucks and trailers. The typical family would pay $120 per vehicle more each year in gas taxes and vehicle fees, a tough sell even if people recognize roads are in bad shape.

Snyder said Michigan will be stuck with a much larger bill in the future if lawmakers do not act. He cited repair-shop bills associated with driving on pothole-ridden roads that are dangerous for motorists and said spending more on transportation would create jobs.

"This is common sense to me," he said.

Snyder also formally recommended making 320,000 more residents eligible for Medicaid in 2014, a move he said would initially save $200 million a year because people who receive care from state-funded programs would instead be covered with federal money. That was met with skepticism by Republican legislators who worry the federal government will renege on a promise to cover much the cost after 2017.

"Whenever you get their money, we lose any control over what we do and what our recipients get," said Sen. Mike Green, R-Mayville, who questioned taking the dollars as Washington grapples with deficits and debt.

To head off those kinds of concerns, Snyder called for setting aside $100 million a year of savings from Medicaid expansion so Michigan can pay a portion of the cost once the U.S. government stops covering 100 percent.