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Legislative Update: Transportation Funding Package

Transportation Funding Package

After months of debate, the legislature passed a complex road funding proposal package that could provide $1.2 billion for repairing state roads.

The proposal includes a May 2015 statewide ballot proposal that would raise the state sales tax from 6 to 7%. Proceeds from the legislative package would provide;

  • $1.2 billion a year, when fully phased in, for road repairs.
  • Phasing out of the gas sales tax and switching to a wholesale tax, a move that would provide for growth in road revenue in future years. Please note, as cars become more fuel efficient, the per gallon sales tax will provide less revenue with each passing year.
  • $45 million in increased vehicle registration fees and $50 million in fees on heavy trucks.
  • $260 million in the Restoration of the Earned Income Tax Credit (EITC), resulting in a tax credit of about $300 a year for the working poor.
  • About $340 million in increased funding for schools, along with a constitutional guarantee that the school aid fund could not be diverted to universities.
  • $112 million for transit services.

The legislation signed in the package were:

  • SB 847, PA 469, which will increase the EITC from 6 percent should the proposal be approved.
  • HB 5477, PA 468, which establishes a wholesale tax on motor fuel.
  • HB 4630, PA 470, which freezes the registration depreciation on current vehicles and ends it for new vehicles.
  • HB 5167, PA 471, which establishes that 20 percent of all road and bridge maintenance contracts be on a pay for performance basis.
  • HB 4251, PA 472, which allows a township that pays at least half of a road project to require competitive bidding for the project.
  • HB 5460, PA 473, which establishes warranties on all projects.
  • HB 4539, which removes the sales tax from gasoline
  • HB 5492, PA 474, which exempts fuel from the use tax.
  • HB 5493, PA 475, which requires parity on the gasoline and diesel fuel tax.
  • SB 80, PA 476, and SB 81, PA 477, which allocates $40 million for at-risk funding for students.

Much of the proposal is embodied in a legislative package of bills that will only take effect if the ballot proposal is approved.

The Senate had previously passed legislation nearly doubling the gas tax, raising a similar amount of money for road repairs. The House countered with a plan to take the money from existing programs; specifically referencing education funding and local government aid. The ballot proposal compromise was developed and voted on Thursday, December 18th, the final day of the legislative session for 2014.

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