LANSING, Mich. (AP) — Michigan senators soundly defeated a
proposal Wednesday that could have led to a sales tax increase as
lawmakers scrambled to try to raise taxes and vehicle registration fees
to improve deteriorating roads with one day left before the Legislature
adjourns for much of the summer.
The Senate rejected a proposal to
ask voters if they support raising the state’s 6 percent sales tax to 7
percent and dedicating the extra revenue to transportation. The
proposed state constitutional amendment won 14 votes, far short of the
26 needed in the 38-member Senate.
But the Republican-led chamber
may vote Wednesday night on doubling Michigan’s 19 cents-a-gallon
gasoline tax to raise at least $1 billion more annually for
transportation, which would require a simple majority vote instead of
the two-thirds threshold needed to amend the sales tax.
The bill —
linked to a tax reduction for homeowners and renters — would increase
the gas tax to roughly 41.5 cents within five years, if fuel prices stay
flat. The tax could rise or fall no more than 5 percent in future years
to account for any major year-to-year fluctuations in price.
If
the gas tax increase wins approval in the Senate, its fate could be
uncertain in the House a day before lawmakers plan to break before
August’s primary election. The House last month passed a more modest
$450 million increase in road and bridge spending that mostly diverts
money from elsewhere in the budget, yet Senate Minority Leader Gretchen
Whitmer, D-East Lansing, said she doubts the Senate would have started
to move ahead without assurances its plan could pass in the House.
Michigan
spends less per driver on roads than any other state yet also has some
of the country’s highest taxes at the pump because the sales tax applied
to motor fuel mostly goes to schools and local governments under the
state constitution. Republican Gov. Rick Snyder has said at least $1.3
billion more per year is needed at a minimum to bring roads up to par or
else the system will fall further into disrepair.
Some senators
had preferred giving voters opposed to the gas tax hike the option of
instead increasing the sales tax in the November election.
"That’s
what democracy’s all about. Let’s put the two plans out there, and
let’s let the citizens of this state make up their own mind," said Sen.
Bruce Caswell, R-Hillsdale, one of 13 Republicans to support the sales
tax option along with a lone Democrat. Thirteen Republicans and 11
Democrats voted against the measure, with Democrats complaining it would
hurt lower-income residents and some in the GOP saying they favor
drivers paying at the pump for the roads they use.
Senators
narrowly approved legislation to stop, starting in 2016, an automatic
drop in license plate fees given to drivers in each of their first three
annual plate renewals. After defeating the bill earlier in the day, the
Senate amended it so drivers would not retroactively see their fees go
up.
"It will not raise the same amount of revenue. However, the
automobile owners in the state of Michigan will not see a pop-up in
registration fees the next time they go back to the secretary of state
and renew their license plates," said Sen. Howard Walker, R-Traverse
City.
Senators also rejected a House-approved bill that would
raise fees and fines on overweight trucks to help boost transportation
funding.
"These are tough votes. No one’s excited to vote for a
gas tax increase of this magnitude. But I have always said if
(Republicans) are willing to work with me on some (tax) relief for
people that perhaps we could get to a point where we … move it
forward," said Whitmer, saying half of Democrats and half of Republicans
must help pass it in a bipartisan way.
The legislation is tied to
bills overwhelmingly approved Wednesday making some homeowners and
renters eligible for a $200 million income tax break — a key demand that
Democrats wanted in exchange for helping increase taxes. Households
earning between $50,000 and $70,000 a year would become eligible for the
Homestead Property Tax Credit that now can be claimed by households
earning under $50,000. The credit is worth up to $1,200 and is more
substantial for seniors and lower-income earners.