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Mich. Governor Backs Off Call for Big Gas Tax Hike

The Gov blinks in a showdown over the state's gasoline tax.

Thu September 26, 2013 - Midwest Edition

LANSING, Mich. (AP) Gov. Rick Snyder backed away Sept. 11 from his call to raise an extra $1.2 billion for much-needed road and bridge maintenance through higher gasoline taxes and license plate tabs but said part of a funding plan he proposed early this year is salvageable in the Legislature.

In an interview with The Associated Press, the Republican governor suggested lawmakers could still replace the state’s flat per-gallon fuel tax with a percentage levy based on the wholesale price of fuel if the revenue collected remains the same, at least initially.

“We may not get a totally comprehensive solution, but are there good things we can still do about improving roads?’’ Snyder said in a phone interview from Beijing, where he was leading a 10-day Asian trade trip.

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 gasoline tax is the same as it was 15 years ago. The 15 cents-a-gallon diesel tax was last raised nearly 30 years ago.

Legislators did not embrace Snyder’s call to boost the gas tax to the equivalent of 33 cents a gallon and hike car license plate fees by 60 percent, and the proposal has stalled for much of the year like an earlier one did in 2012. Legislative leaders instead have been talking about putting a sales tax increase on the ballot to fix roads and boost education spending, but a deal is unlikely.

“Could we look at moving from a retail-cents-per-gallon to a wholesale percentage kind of tax that would be revenue neutral?’’ Snyder said. “It wouldn’t really change the revenue, but it would actually help protect purchasing power in future years. One of the ways we got in trouble with our transportation funding was, by having cents-per-gallon, we sort of went backwards in the last few years.’’

At least immediately, a wholesale tax might not cost drivers any more than existing taxes. But as inflation pushes up the price of fuel, the state could gradually gain more money to fix roads and bridges, making it not a “revenue-neutral’’ plan in the long run.

Snyder first floated such a move in October 2011, and it has not gained much traction despite being seen as a way to avoid asking lawmakers to vote to raise fuel taxes every few years to keep pace with rising construction costs. Legislators would have to approve legislation switching from the per-gallon to the wholesale tax and setting the upper and lower limits for how much could be collected.

Restrictions would be put in place so that sudden spikes or drops in fuel prices would not drastically change pump prices. Michigan currently collects a 6 cents-per-dollar sales tax on what motorists pay at the pump.

Snyder, who has said repairing crumbling highways would help boost economic development and save taxpayers a much larger bill down the line, made his comments during his third trade trip to Asia.

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