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Gov. Snyder Calls House Road Funding Plan Constructive

The Governor however admitted that the $500 million annual plan falls short of his spending target.

Thu April 24, 2014 - Midwest Edition

LANSING, Mich. (AP) Gov. Rick Snyder praised Republican House leaders’ plan to spend $500 million annually on roads as a proactive move toward long-term funding changes, but said it falls short of his spending target.

In an interview with The Associated Press, the Republican governor called the proposal "a very constructive step" that incorporates some of his recommendations but requires further discussion. A structural funding change to improve road maintenance could save lives and money, he said.

"I’d still like to get to $1.2 billion of additional revenue, so we do have a difference there. But I would not criticize the plan, so let’s talk about it," Snyder said in the telephone interview from Dusseldorf, Germany, where he was leading a weeklong European trade trip.

Republican House Speaker Jase Bolger announced on April 3 a roads funding plan of at least $450 million in fiscal 2015 and at least $500 million annually by fiscal 2018. The legislation would require warranties on road work to avoid short-term fixes and would change various streams of tax revenue.

Bolger agreed with Snyder that Michigan roads actually need $1.2 billion annually, but said the proposed changes are better than one-time funding allocations the Legislature has made in recent years. Passing the legislation in time for the summer construction season "won’t be easy,’ he said.

Michigan’s main transportation fund is at its lowest level in 30 years when adjusted for inflation, because people are driving less and with more fuel-efficient cars while the 19 cents-per-gallon gas tax is the same as it was 15 years ago. The 15 cents-a-gallon diesel tax was last raised nearly 30 years ago.

Snyder has advocated for changing the flat tax to a wholesale tax, which House leaders included in their plan. They proposed replacing the 19 cents-per-gallon tax on unleaded gasoline with a 6 percent wholesale tax, which wouldn’t increase revenue to start. As inflation pushes up the price of fuel, the state could gradually gain more money to fix roads and bridges.

The 15 cents-per-gallon tax on diesel fuel also would be replaced with a 6 percent wholesale tax, generating an estimated $47 million more next year.

Representatives from the Michigan Chamber of Commerce, Michigan Building and Construction Trades Council and Michigan Infrastructure and Transportation Association said they supported Bolger’s proposal during a news conference. Other organizations said in interviews that the proposal doesn’t go far enough.

Denise Donohue, director of the County Road Association of Michigan, said roughly $2.1 billion is needed for "getting us out of pothole heck’ and maintaining "drivable, safe conditions.’

"We’re thrilled to see the issue move off dead center, and ... recognition that we do need a sustainable, permanent fix that folks can budget on and rely on,’ she said. "It’s not easy for the Legislature to do this. It’s an election year ... and yet it’s also a very tough year for potholes and road conditions."

John LaMacchia, legislative associate of the Michigan Municipal League, said the organization is neutral on the proposal overall and more conversations are needed to determine how it would affect communities.

"We need to really understand what the effect on the overall budget of the state of Michigan is going to be, and how that’s going to affect all parties involved," he said. "We have to be concerned about the bigger picture here."

Other changes proposed by House leaders include at least partially privatizing road maintenance under a requirement that the state bid out contracts for road work and upkeep. Projects over $5 million would need a five-year warranty, which would require companies to maintain an area of road after building it. All other road work also would need a warranty.

The legislation would allocate some revenue from the existing 6 percent fuel sales tax to roads while preserving money that goes to schools and local governments, Bolger said. That’s estimated to generate $130 million next year. The proposal also dedicates 1 percent of the state’s use tax revenue to roads, or about $239 million in 2015.

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