Republican Gov. Rick Snyder signed legislation Monday afternoon to advance a plan for funding upgrades to Michigan’s aging roads and bridges.
The plan will remove the current sales tax on fuel, which currently supports schools and local governments, and replace it with a wholesale tax on motor fuels, such as gas and diesel, earmarked for funding transportation.
The plan is expected to result in a 20-percent drop in yearly appropriations from the School Aid Fund to public universities, though the legislation includes provisions to offset the losses with General Fund dollars.
To protect schools and local governments from losing revenue as a result of these alterations to the fuel sales tax, a proposal will go before the electorate in May that includes a 1-percent increase in the sales tax to 7 percent. The result from this 1-percent increase would be an additional $300 million per year for schools and $94 million per year for local governments.
The legislature would raise approximately $1.3 billion per year for transportation. Approximately $1.2 billion would go to restoring the roads and $127 million would be allocated for public transportation after two years of debt reduction.
“This is a solution that takes care of our roads in terms of a billion dollar plus investment, does it in a way that does not harm other parties,” Snyder said. “In fact, it actually provides more resources for our schools, for our local governments, for our mass transit, mass public transportation.”
Gretchen Whitmer, former State Senate Democratic leader, said there were tough negotiations in determining the legislative package, but she noted she was proud of being a part of this process.
“This represents an investment in critical things, like our infrastructure, our roads, our bridges, which translates into the safety of our people, but it also represents a real investment in our schools, which I think is something that is going to be critical as we go to the ballot in May. That is something I think we are all invested in making sure we’re successful,” she said.
In an interview with The Michigan Daily on Dec. 18, Snyder Press Secretary Sara Wurfel confirmed that if the proposal is approved, General Fund dollars will be allocated to substitute higher education funding no longer provided by the School Aid Fund, though it is unclear if this funding will fully make up for anticipated losses.
In an e-mail interview on Monday, David Murray, Snyder’s deputy press secretary, said the governor has been a proponent of prioritizing “P-20” education, which includes elementary through higher education.
“We know that a rock-solid education is essential to build a talented workforce in Michigan that will attract and retain businesses and grow more and better jobs for the state’s residents,” Murray said.
Murray also noted Snyder is a supporter of increasing dual enrollment opportunities for high school students and the cost of higher education, which he outlined in the fiscal 2015 budget.
“The fiscal 2015 budget, which went into effect in October, includes a 3-percent increase in operations funding for community colleges and a 5.9-percent increase for state universities,” he said. “Universities were required to limit tuition increases to 3.2 percent or less in order to receive their funding increase.”
Murray added that Snyder’s State of the State address, which is next week, will preview additional recommendations for the upcoming fiscal year.