LANSING – Governor Rick Snyder said Tuesday night he is ready to sign a road funding proposal that will generate $1.2 billion for the state’s roads and bridges by 2021 after the House and Senate gave the final green light to an amended package on Tuesday.
With House passage of the key components just before 10:30 p.m., on an extraordinary late evening legislative session taking place as everyone in and around the Capitol kept one eye on election results in three special House primary elections as well as local races, the road funding debate that has consumed the capital city for so long finally came to a crescendo.
“There is time it takes to review all the bills, but I’m ready,” Snyder said at a press event following the House GOP giving the go-ahead to changes made by the Senate to a seven-bill package. “(The legislation) will lead to safer and better roads in our state and do it in a fiscally responsible way. This will not be done at the expense of other people.”
Indeed, one of the chief criticisms, especially from Democrats in both chambers who vehemently opposed the package, is that the final proposal does not address a $1.2 billion problem fast enough and not in a fiscally responsible way because it relies so heavily on General Fund money.
Officials in the governor’s office had first expressed hesitation about the 600/600 proposal the House first considered in August, and when pressed on what changed his mind about trying to generate $600 million in new revenue and find use $600 million in existing revenue, Mr. Snyder said, “It was really having a good dialogue about talking through things.”
He said he worked closely with the Department of Treasury to identify when and how the state might be able to absorb such an impact to the General Fund. He said ultimately, the package is phased-in in a fashion that works.
“I view this as positive progress,” Snyder said.
Outside of the Legislature, the proposal was met with criticism from Democrats and some unions but optimism by most business groups (see separate story), the immediate concern being where some future legislatures might cut hundreds of millions of dollars from the General Fund when the plan is fully implemented in 2021. Snyder has insisted the General Fund will grow enough to accommodate the $600 million from the General Fund to avoid cuts to other programs.
Meanwhile, House Speaker Kevin Cotter (R-Mount Pleasant), after working his caucus for support for about eight hours from the time the Senate passed the package earlier in the day, agreed with a characterization after session that this was a momentous day.
“I think this is the single-largest issue that’s evaded us for five years, and I feel this is a good fix to the problem that’s going to be protected against time in the way of inflation, so I feel this is huge,” Cotter told reporters after session. “This is one of a handful of items you look at and say, ‘that’s something that is going too far outlast my life in Lansing.'”
In his floor speech, Cotter deflected criticism that the proposal is fiscally irresponsible by saying instead that inaction would be such and “there’s a huge cost of inaction,” he said. “Inaction is not acceptable. We’ve been debating numbers, the size of the problem, the source of the revenue. What we said with this plan … is let’s agree significant investment is needed.”
Senate Majority Leader Arlan Meekhof (R-West Olive) also said the changes made by the Senate were “a good start” to fixing the state’s infrastructure problems.
“We’ve been working on it for a number of years, ever since I’ve been in town, and many would say we were not quite adequate when we passed something 17 years ago,” he told reporters after session. “So this is a step in that direction to keep that going, invest in our infrastructure, our economy is moving along quite well and this is another piece of that that’s going to help our economy continue to grow.”
He admitted that not everything the Senate sent over was perfect but said his caucus has more ideas “for some trailer bills that might make this even better,” Mr. Meekhof said. One of the things he’d like to improve upon is getting to $1.2 billion faster, he noted, but he did not go into further details about other potentials related to road funding.
Both Senate Minority Leader Jim Ananich (D-Flint) and House Minority Leader Tim Greimel (D-Auburn Hills) were sharply critical of the package’s passage in their respective chambers.
“It’s taking too long to implement. It will be years down the road, (and there are) $600 million in cuts they won’t identify. It’s just not a real serious plan, and I think trying to get things done quickly is not the best way to do things,” Ananich said. “It’s just not responsible. Tell people they’re going to raise tuition for their kids. Tell people they’re going to cut money for their schools, cut their police and fire, have the courage to do that if you’re going to pass a plan, and I think the Legislature flubbed up today a little bit.”
He said his caucus would’ve been willing to support a plan that “fully supported” roads and could get passed in the House. But this was political plan, he said.
“(This is) checking a box, saying we got roads done. Next year, the year after that, the year after that, the roads are not going to get better,” Ananich said. “I think when you look at all the reports, when it comes to the quality of the roads and what we need, it’s just not enough.”
Greimel said the proposal would further burden families and seniors who have suffered enough under the Snyder administration.
“This is the worst of all worlds. It raises taxes on families and seniors who have already seen their taxes go sky-high while draining funding from education and public safety, and still not fixing the roads. The plan won’t even be phased in until the year 2021,” he said. “Michigan residents deserve their roads fixed now, not six years from now.”
And he said it’s always difficult politically for future legislators to undo tax relief, so when a future Legislature does have to deal with the General Fund cuts, the problem is complicated.
“What the majority voted for tonight is a snowballing budget deficit that will hit future generations, and it’s very easy for the current legislators to not have the courage to identify where the cuts are going to come from, and rely on future legislators … to make the tough decisions,” Greimel said. “This is kicking the can further down the road both when it comes to making tough budgetary decisions and when it comes to actually fixing the roads.”
Ananich also did not have confidence in the assertion by Sen. Dave Hildenbrand (R-Lowell), chair of the Senate Appropriations Committee, that public safety, education and public health would be protected in upcoming budgets.
“Is he running for a third term? He’ll be out of there by the time we have to make the cuts. It’s easy to say that when you’re not having to make the cuts,” Mr. Ananich said. “I think it’s important to make sure we pass things we have responsibility for, not other folks, and we just didn’t do that today.”
In the Senate, Sen. Patrick Colbeck (R-Canton Township) was equally as critical of the proposal when it was being taken up on the floor.
“We all agree it takes money to fix the roads. In light of all the financial pressures upon our families due to increasing costs in all facets of their lives, don’t you think it would be the responsible thing to do to find ways to fix the roads without taking more of their money?” he said in a statement on the floor. “They pay us to pinch the pennies of state government so they don’t have to pinch their pennies at the kitchen table. Over the past five years, our state budget has increased from $46.8 billion to $54.5 billion, yet we are told we don’t have enough money to fix the roads with existing funds. What is a higher priority than roads?”
He said the proposal was “politics as usual,” and urged his colleagues to break the pattern of thinking that raising taxes was always the answer.
But Sen. Virgil Smith (D-Detroit), the lone Democrat who joined Republicans in support of any (and all) of the bills, said he would support the package because, “It is an embarrassment that the Motor City, the heart and soul of the auto industry that produces the majority of our vehicles, is home to some of the worst roads in the country. Every day that we do nothing, we are threatening the economic security and even the physical safety of Detroiters, Michiganders and anyone who drives on our roads.
“I am tired of hearing about Detroit families having to sacrifice their budgets, not putting food on the table, and paying bills to sink money into their cars because they hit another one of the city’s potholes,” Smith said.
THE VOTES: The day in the Senate began as business-as-usual, though rumors had been swirling since Monday afternoon the chamber would take another shot at getting the package (HB 4614, HB 4616, HB 4370, HB 4736, HB 4737, HB 4738 and SB 414) back to the House for concurrence and enrollment.
Indeed, the chamber ran through General Orders on unrelated bills and recessed until 2 p.m., at which point they again recessed at the call of the chair. The Senate Republicans held an off-site caucus retreat, though sources close to them said the purpose was not to talk about road funding. By 2:30 p.m., the chamber began voting on amended versions of the bills sent to them by the House.
The biggest change in the new proposal is how much money is generated from registration fee increases. The Senate, when it passed its proposal in July, did not rely on registration fee increases at all except for an increase to hybrid and electric vehicles. But the House had hoped to get some $400 million in new revenue from a 40 percent increase for passenger vehicles and trucks.
Ultimately, the substitute adopted by the Senate generates $200 million from a 20 percent increase in HB 4736, which cleared the Senate 20-18. All Democrats except for Mr. Smith voted in opposition to the bill. Republicans Colbeck, Sen. Jack Brandenburg of Harrison Township, Sen. Judy Emmons of Sheridan, Sen. Joe Hune of Whitmore Lake, Sen. Phil Pavlov of St. Clair, Sen. John Proos of St. Joseph, Sen. Tory Rocca of Sterling Heights and Sen. Tonya Schuitmaker of Lawton also opposed its passage.
Upon arriving in the House, Republicans were about five votes short of the necessary minimum 54 votes needed. But as the hours passed, eventually the votes materialized.
The House concurred in the changes made by the Senate by a vote of 55-54 with three more individuals voting in opposition Tuesday than did the last time the House took the bill up. Rep. Gretchen Driskell (D-Saline) was absent the last time the House took the bill up but cast a no-vote this time, and Rep. Peter Lucido (R-Shelby Township) switched his vote to oppose it Tuesday.
The other major difference comes with the gas tax increase. The Senate proposal relied heavily on this aspect of the proposal to generate new revenue while the House did not. The Senate proposal would have eventually increased the gas tax by 17 cents on January 1, 2017 and the House proposal would’ve only upped the gas tax by 3.3 cents on October 1, 2018.
Instead, HB 4738 increases the gas tax from 19 cents per gallon to 26.3 cents per gallon, a 7.3 cents per gallon increase overall, beginning January 1, 2017. The bill was passed by the Senate 20-18, with all Democrats except Smith voting no and Republicans Brandenburg, Colbeck, Sen. Mike Green of Mayville, Hildenbrand, Hune, Pavlov, Proos, and Schuitmaker joining the opposition.
In the House, the bill was concurred in 55-52 (previously it cleared the House 56-50). Rep. Ray Franz(R-Onekama) switched from a no to a yes vote, and both Rep. Gary Glenn (R-Midland) and Rep. Henry Vaupel (R-Handy Township) switched from yes to no votes on Tuesday.
The diesel parity bill, HB 4616, cleared the Senate by the same margin and with the same individuals who opposed the gas tax increase opposed to it. The House passed the bill 56-51, the only change from previously coming from Driskell tallying a no vote.
The last time the Senate took up both the gas tax and the diesel tax increases, Sen. Dave Robertson(R-Grand Blanc) voted in opposition but he supported the measures on Tuesday. The reason for his switch was not immediately clear as he did not return a call for comment after session.
The two tax increases are intended to generate $400 million in new revenue, according to an analysis of the updated bills handed out Tuesday. Inflationary increases are included in both gas tax bills and are indexed to the national Consumer Price Index. Under the compromise, they will begin January 1, 2022 (sooner than the House and later than the Senate proposal, respectively).
And HB 4737 allows the Michigan Transportation Fund to accept funds from any source, as well as adds provisions related to road construction warranties. The bill would also effectively allow, with approval from the director of the Department of Transportation, the city of Detroit to use up to 20 percent of its MTF distribution for public transit purposes. It also includes language creating the Roads Innovation Task Force to prepare a report no later than March 1, 2016 evaluating road materials and construction materials, and allowing MDOT to build roads that could last at least 50 years.
The Roads Innovation Fund created within the bill would collect $100 million each fiscal year beginning in 2016-17 form the fuel taxes, and every year thereafter. That money is to be placed in a so-called “lock box” and can only be “unlocked” via a concurrent resolution indicating the funds will be used specifically for “higher quality, longer life cycle road construction purposes.”
That bill cleared the Senate 27-11, with Smith in support and Emmons in opposition.
In the House, the bill passed 73-34 (previously it was 101-5, though the concept of a lock box did not exist then either). Only Democrats voted in opposition on Tuesday, though some lent their opposition to this bill, including Greimel.
HYBRID/ELECTRIC REGISTRATION, INCOME TAX ROLLBACK: Both the House and the Senate agreed, under HB 4614, to increase registration fees for hybrid electric vehicles and non-hybrid electric vehicles, so nothing about that proposal changed. The bill was passed 21-17 with Brandenburg, Colbeck, Hildenbrand, Hune, Pavlov, Proos and Rocca joining all Senate Democrats except Smith in opposition.
In the House, the bill passed 55-52, a difference from the previous vote of 56-50, though the changed votes were not immediately available.
And the income tax rollback policy the Senate needed to secure some Republican votes in its chamber for a tax hike was also maintained and only slightly modified. Under the amended version of SB 414, the rollback would occur when General Fund growth exceeds the rate of inflation times 1.425, the latter part being new to the mix. The compromise also holds the rollback off until January 1, 2023 (the Senate had proposed it begin January 1, 2018, and the House moved that up to 2019).
SB 414 was passed 28-10, Smith joining Republicans in support of the bill. In the House, the bill passed 61-46, Driskell again joining the opposition where she was absent previously.
HOMESTEAD PROPERTY TAX: HB 4370 to expand the Homestead Property Tax Credit – a proposal put forward by the House – did not see major changes. The household resources cap will remain at $60,000, as the House proposed, but the income multiplier did change from 3.4 percent in tax year 2017 to 3.2 percent in tax year 2018. The maximum tax credit for tax year 2018 remains at $1,500, but the compromise also increases the renter credit available. And the taxable value threshold, household resources cap and max credit amount will be indexed to inflation beginning tax year 2021 now instead of calendar year 2022.
The bill passed the Senate 28-10, with Smith joining all Republicans in support.
And the House gave the bill the go-ahead by a vote of 62-45, Driskell additional vote being the only difference from previously.
This story was published by Gongwer News Service. To subscribe, click on www.gongwer.com
