Bills to Hike Michigan Gas Tax by 15 Cents Squeak Through State Senate

Unlike the complex May ballot measure that voters overwhelmingly defeated, the two bills to amend the state Motor Fuel Act, HB 4615 and HB 4616 do not call for public votes. The legislation raises the 15-cent diesel tax to match the 19-cent per gallon gas excise tax*, last increased in 1997, hikes both to 34 cents by 2017, and indexes them to inflation.

Democrats who might have supported that gas tax increase had a problem with a different aspect of the bill, writes Kathleen Gray of the Detroit Free Press.

The Senate also passed a requirement that $350 million from income tax revenues be shifted to roads in the 2015-16 fiscal year and $700 million in 2016-17. But details weren't given on where those dollars would be shifted from and that caused most of the Democrats to withhold support from the entire package.

"I want to fix the roads as much as all of you. I'm more than willing to sit down and find a solution," said Sen. Curtis Hertel, Jr., D-East Lansing. "We can't fill potholes on the backs of working men and women."

Consequently, only one Democrat supported the bill, along with 18 Republicans, creating an even 19-19 vote that needed the lieutenant governor's vote to pass it.

Controversial language to end "the Earned Income Tax Credit that provides nearly $150 a year to working poor families" that is in the House bill was not included in the Senate version. "Now it becomes the House's turn to deal with the huge changes made by the Senate to the bills they passed earlier this month," writes Gray, who goes on to describe additional differences between the House and Senate versions of the legislation.

At 15 cents per gallon (19 for diesel), Michigan's gas tax hike would be the highest increase covered here. [Next would be Washington's 11.9 cents bill which the legislature passed on July 1]. However, the most controversial aspect of the tax hike is not its size but the transfer of $700 million annually of income tax revenue to the transportation fund, elimination of the EITC, and possible reduction of the income tax.

End Note:

*According to the American Petroleum Institute [PDF], as of April 1 Michigan had $.1406 in "other taxes/fees" in addition to the $.19 gas tax, resulting in a total of in a total gas tax of $.3306. It was the 12th highest in the country as of April 1 [PDF].

Hat tip to Tanya Snyder, StreetsblogUSA