Michigan voters resoundingly defeated Proposal 1 last week, which would have boosted revenue for transportation funding by increasing the state’s fuel tax to 41.7 cents or 14.9 percent of a gallon of fuel’s base value, whichever was greater.
Introduced by state Rep. Joe Haveman as House Joint Resolution UU, the legislation also would have mandated that revenue generated by the fuel tax be allocated to the transportation fund. Registration fee discounts also would have been eliminated, while there would have been increased heavy commercial vehicle registration fees and an electric vehicle surcharge.
The proposal would have cost Michigan households an estimated $477 to $545 in additional taxes.
Other changes that the legislation called for included: doing away with the sales and use taxes on fuel for vehicles; increasing the sales and use tax on non-fuel items from 6 percent to 7 percent; allowing municipalities to finance road projects through competitive bidding; requiring performance-based evaluations for state projects and warranties for road construction projects costing more than $1 million; and increasing the state’s Earned Income Tax Credit from 6 percent to 20 percent.
With 80 percent of voters against the changes, Proposal 1 was the worst defeat of a Michigan ballot measure since 1963.
“While voters didn’t support this particular proposal, we know they want action taken to maintain and improve our roads and bridges,” Michigan Gov. Rick Snyder said. “The ‘relentless’ part of relentless positive action means that we start anew to find a comprehensive, long-term solution to this problem. Doing nothing isn’t an option as the costs are too great.”
House Democrats want a new proposal. They agree increased road funding is necessary, but do not want any increased tax burdens for middle-class households.
