Michigan Aggregates Association

Road Funding Bill Passed by both House and Senate

It has certainly been a long battle, but last night (Nov. 3) at 10:30 p.m. the House finally passed a Senate amended road funding proposal package that will generate $1.2 billion for the state’s roads and bridges by 2021. Infographic.pdf

At first count, there did not appear to be enough support to ensure the passage of the suite of bills. However, MAA was all hands on deck, along with other industry partners, to ensure the eventual passage of the bills.

While these bills differ from the original house versions, there are many similarities. An analysis of the final passed versions are as follows:

House Bill 4738 amends the Motor Fuel Tax Act to increase motor fuel taxes by increasing the tax on diesel motor fuel from 15 cents per gallon and the tax on gasoline motor fuel from 19 cents per gallon to a single rate of 26.3 cent per gallon on all motor fuel effective January 1, 2017. The bill will also annually adjust the tax rates for motor fuels based on consumer inflation (using the U.S. Consumer Price Index), with increases capped at 5% per year, effective January 1, 2022.

House Bill 4736 amends the Michigan Vehicle Code to increase vehicle registration tax rates. Rates for passenger cars, vans, light trucks, and large commercial trucks would all be increased by approximately 20% across the board, effective January 1, 2017. The current average registration tax for a passenger vehicle is approximately $100; this bill would increase that average by approximately $20. The bill would also create a new registration tax surcharge for electric-powered motor vehicles.

House Bill 4370 amends the Income Tax Act of 1967 to earmark a portion of income tax revenue currently allocated as General Fund/General Purpose (GF/GP) revenue to the Michigan Transportation Fund for distribution to state and local road agencies (bypassing the Comprehensive Transportation Fund). The earmarks would be as follows:

  • $150 million for FY 2018-19
  • $325 million for FY 2019-20
  • $600 million for FY 2020-21 and subsequent fiscal years

Senate Bill 414 amends the Income Tax Act of 1967 to create a mechanism that will automatically reduce the individual income tax rate if the increase from one year to the next in total General Fund/General Purpose (GF/GP) revenues exceeded inflation (as calculated using the U.S. Consumer Price Index). This determination would begin with tax year 2023 (based on final FY 2021-22 GF/GP revenue growth) and continue indefinitely on an annual basis.

House Bill 4614 amends the Streamlined Sales and Use Tax Revenue Equalization Act.

House Bill 4616 amends the Motor Carrier Fuel Tax Act to make complementary amendments to those in House Bill 4738.

House Bill 4737 amends Public Act 51 of 1951 to require the Department of Transportation to form a Roads Innovation Task Force that would issue a report to the Legislature by March 1, 2016 that would include, among other things, an evaluation of road materials and construction methods that could allow the department to build high-quality roads that last longer than those typically constructed by the department, with a goal of roads lasting at least 50 years, higher quality roads, and reduced maintenance costs. The bill would also add a number of provisions related to road construction warranties and will effectively allow, with the approval of the director of the Department of Transportation, the City of Detroit to use up to 20% of its Michigan Transportation Fund distribution for public transit purposes.

A summary of the preliminary estimate of the road funding package fiscal impacts is available here.

Stay tuned for future updates as more details become available. If you have any questions, please contact Doug Needham at 517-381-1732 or dneedham@miagg.org.