Published in Economic Development

Gov. Whitmer’s 45-cent gas tax plan a ‘bridge too far’ for small business, survey finds

BY Sunday, April 07, 2019 08:38pm

Members of one organization advocating for small businesses in Lansing left no doubt in their opposition to Gov. Gretchen Whitmer’s proposal to raise the state gas tax 45 cents per gallon to generate $2.5 billion for fixing roads.

Among the respondents to the survey by the Michigan office of the National Federation of Independent Businesses, 93 percent said they oppose the governor’s proposal. Just 4 percent responded “yes” when asked whether the legislature should adopt the plan, and 3 percent were undecided.

Charlie Owens, state director for the NFIB, said the results reflect skepticism among members that all of the revenue generated by a higher fuel tax would go to roads. He cites the $600 million now generated by a higher gas tax and user fees implemented under a roads plan enacted two years ago. That funding would wind up back in the state’s general fund for other uses, such as school funding and tuition assistance at community colleges that the governor has proposed.

“While small business owners recognize the importance of good roads, this proposal is a ‘bridge too far’ as a funding solution,” Owens said. “They reacted pretty viscerally to it.”

The survey results are vastly differently from 2015, when NFIB members supported a ballot proposal for road funding that ended up getting trounced at the ballot.

Owens suspects members today are “just very skeptical” of claims that $2.5 billion annually is needed to stop the deterioration of roads in Michigan and that some of the money will get spent elsewhere in the state budget.

“I think they’re pretty weary of it,” he said.

Under the governor’s budget proposal to legislators, the state’s 26.3-cent gas tax would increase by 15 cents per gallon Oct. 1, 2019, the start of the state’s next fiscal year, then increase two more times by 15 cents, each in six-month intervals.

In proposing the gas tax increase last month, Gov. Whitmer launched her “Fixing Michigan Roads” plan that aims to restore 90 percent of the roads in Michigan to fair or good condition by 2029, up from 78 percent today.

When she submitted to lawmakers her 2020 fiscal year budget including the proposed gas tax increase, Gov. Whitmer said if left unaddressed and “if we do nothing today other than what’s been done in the past,” roads will deteriorate further. Under that plan, just 65 percent of roads would be in good or fair condition within two years, and that would fall to 60 percent within three years.

Other organizations have offered similar analyses on what it will take to repair the roads. A bipartisan group of former legislators, working as the Michigan Consensus Policy Project and led by former Republican Sen. Ken Sikkema, previously proposed a 47-cent increase in per-gallon fuel taxes.

In unveiling its proposal in January, the Michigan Consensus Policy Project cited a report from a state commission two years ago that identified a need to generate $2.6 billion annually to repair Michigan’s roads, bridges and other infrastructure. Lawmakers never acted on the report. The plan followed the state Legislature’s passage of a $1.2 billion plan that raised the gas tax 7 cents and increased vehicle registration fees but doesn’t get fully funded until 2021.

Results from the NFIB’s survey indicate the difficult path Gov. Whitmer faces in convincing lawmakers and voters to enact another increase in the gas tax. She and others have said the 2017 roads plan was not enough to address the problem with state roads that has been decades in the making.

“Our members are saying, ‘What happened to that money? It’s not even online yet and you’re already saying you need $2.5 billion,’” Owens said. “I just think there’s a lot of frustration out there.”

The NFIB’s survey also found strong opposition to raising the state sales tax from 6 percent to 7 percent for roads, albeit at a lesser rate than the objection to a higher fuel tax.

Asked if they would back a 1-percent increase in the sales tax that was dedicated strictly to road funding, 60 percent of respondents said “no” and 32 percent said “yes.” The remaining 8 percent were undecided.

“If you’re asking what would be more palatable to them, it would be that,” Owens said. “Still not supporting it, but clearly a lot more of our members think that that may be a better way to go.”

One advantage in possibly using the sales tax to fund road repairs is that as new vehicles developed today achieve higher fuel mileage, the gas tax “is a diminishing base” for generating revenue, Owens said.

“The number that percentage is applied to keeps going down,” he said. “Sales tax is the opposite. You’re hitching your star to a base that typically will always rise, and I think that would be a better funding source.”

Read 3069 times Last modified on Sunday, 07 April 2019 20:37