Michigan Republicans, Taxes — October 22, 2015 at 6:59 am

UPDATED x2: Michigan House Republicans pass budget-busting road funding bill that ends up lowering taxes mostly on the wealthy


“Only the Michigan GOP could look at crumbling roads, underfunded schools and struggling communities and think, ‘You know what? We need LESS revenue’.”

That quote from Progress Michigan executive director Lonnie Scott sums up what happened last night in the state legislature perfectly. After more than two and a half years of wrangling to find $1.2 billion annually that experts say is needed to keep our road and highway infrastructure from becoming rubble, Republicans passed a bill that:

  • Doesn’t raise enough funds to do the necessary repairs to our increasingly deteriorating roads for six years.
  • Doesn’t even kick in for over a year.
  • Eventually LOWERS tax revenues through an income tax reduction that mainly benefits those at the upper end of the income scale.
  • Takes $600 million out of funding for other things like schools, universities, public safety, and health care due to unspecified cuts to the general fund.

Democrats, of course, are livid. They say the legislation, were it to become law, will only generate $400 million of the $1.2 billion needed per year for road funding in its first two years and won’t reach $1.2 billion in annual funds until fiscal year 2021. So I hope you like potholes. They’re going to be around for awhile.

“House Republicans care more about passing a plan – any plan – than about passing a responsible plan that will actually work,” House Democratic Floor Leader Sam Singh said in statement. “The last time they floated this plan, economists and editorial boards around the state told House Republicans that their ideas were irresponsible and unworkable. Instead of fixing what was wrong, House Republicans managed to make it worse and pushed their plan through late at night, without vetting their ideas through committee hearings and testimony.”

Here’s what the House’s nine-bill package — or the 600-600 plan — would do:

  • Shift $600 million from the general fund into roads, which would be phased in beginning in 2019.
  • Increase the tax on diesel fuel from by 7.3 cents and on regular gas by 3.3 cents tax to raise another $200 million. The tax hike would be phased in beginning in 2018.
  • Tie the gas tax to inflation, starting on Oct. 1, 2022.
  • Generate $400 million in new revenue by a 40% across the board hike in registration fees for passenger cars, vans, light trucks and large commercial trucks. The average registration fee for a passenger vehicle is $100. The hike, which would begin Oct. 1, 2016, would increase that to $140.
  • Create a new surcharge for electric-powered vehicles.
  • And expand the number of people and the amount that can be claimed under the Homestead property tax credit to help lower-income Michiganders and roll back the state income tax, when state revenues exceed inflation, beginning in tax year 2022.

Here’s a graphical depiction of the impact that tax cut will have and who benefits most, via State Rep. Jim Townsend:

It’s not like the Democrats are not offering alternatives. They are. They presented a plan that would have generated road funding through a mix of reprioritizing existing funding to go to road funding, reforming registration and closing costly registration loopholes, and scaling back the massive tax breaks given to corporations that blew a gigantic hole in our state budget and created this problem in the first place. Republicans, of course, were not interested in that sort of approach.

The legislation now goes to the Senate where it’s likely to be tinkered with again which means it will go back to the House and they’ll fuss around with it some more (probably trying to find more ways to benefit the wealthy) and on and on and on rinse and repeat…

This is what Republicans, including Rick Snyder, call “leadership” and it’s anything but.

UPDATE: This is how the Michigan Republicans are spinning this travesty this morning on Facebook:

No mention that much of the funding won’t kick in until a year from now and beyond (WAY beyond, actually.) No mention that the so-called tax relief flows mainly to the most wealthy folks in our state and that education and the state programs that the middle class and poor folks rely on will be slashed to pay for it. It’s truly nothing more than an Orwellian meme.

UPDATE 2: The Detroit Free Press does a good job of explaining just how long it’ll take before this Republican plan finally increases road spending to the required $1.2 billion annually:

The House plan provides only $400 million in extra road money for 2016-17; $440 million for 2018; $750 million for 2019; $950 million for 2020; and $1.2 billion not until 2021.

By the time the full funding kicks in in 2021, SIX years from now, it’s very likely that $1.2 billion a year will be insufficient to bring our infrastructure back to where it should be thanks to GOP dithering and “leadership”.