The Michigan Senate could vote as early as today, July 1, on a road funding plan that would create $1.4 billion for road funding annually through various sources once fully implemented.
The nine-bill package, House Bills 4609-4615 and SB 0414 were voted out of the Senate Government Operations Committee on Tuesday on a 3-2 vote along party lines with republicans in favor. Almost half of the money would come from increasing the gas-tax, half would come from unspecified General Fund budget cuts and just over $100 million coming from an elimination of Michigan's Earned Income Tax Credit (EITC)
The gas-tax increase of 15-cents would phase in over the next three years. The gas-tax would jump from 19-cents per gallon to 24-cents per gallon on Oct. 1, 2015, then to 29-cents per gallon on Jan. 1, 2016 with the final jump to 34-cents per gallon coming on Jan. 1, 2017.
The increased gas-tax is estimated to generate $475 million for roads in fiscal year 2016, $733 million in fiscal year 2017 and $822.1 million in fiscal year 2018, according to the Senate Fiscal Agency.
It would also increase the diesel-tax from its current 15-cents per gallon, up to 34-cents per gallon by the same Jan. 1, 2017 date.
Under these bills the motor fuel taxes would be eliminated effective Jan. 1, 2033.
The bills would also require $350 million in income tax revenue be put into the transportation fund for 2016-2017 and $700 million in each year after that.
The individual income tax would also be reduced beginning Jan. 1, 2018 if the percentage of general fund revenues from the previous fiscal year is higher than a positive inflation rate.
One of the more controversial parts of the bill is the elimination of the Earned Income Tax Credit, which is a tax credit given to poor, working class families. The credit gives about $143 a year to working poor families.
By eliminating the EITC, the state would gain $118 million more for roads in Fiscal Year 2016 and $121.5 million more for roads in Fiscal Year 2017, according to the Senate Fiscal Agency.
The bills would also require MDOT and local road commissions to get warranties for full replacement on projects of more than $1 million, and require a competitive bidding for local and state road projects of more than $100,000.
The bills would also place a fee on hybrid and electric vehicles.
For non-commercial hybrid electric vehicles, there would be a $30 fee added to it, with commercial hybrid electric vehicles getting a fee of $100 dollars.
While non-commercial, non-hybrid electric cars would have a fee of $100 and commercial electric vehicles would be implemented a fee of $200.
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