Traverse City Record-Eagle

May 4, 2013

Better roads, higher registration costs

By BRIAN McGILLIVARY bmcgillivary@record-eagle.com
Traverse City Record-Eagle

---- — TRAVERSE CITY — Michigan Gov. Rick Snyder won’t share the pain of his proposal to raise vehicle registration fees to help fix the roads.

Snyder doesn’t own a car, according to Michigan Secretary of State Records, which might partly explain his recent comments on how the registration fee — and his proposed increase — would affect most Michigan vehicle owners.

Snyder recently met with the Record-Eagle editorial board and was asked his plan to fund road fixes, including the fairness of almost doubling vehicle registration fees, particularly regarding fees on older vehicles.

Snyder said registration fees continue to decline as a vehicle ages, so he contended an owner’s increased tax burden also will fall.

“It actually does have a depreciation factor in it; it does reduce,” Snyder said of the registration fee. “It does reduce in time, so there is a schedule effect that does reflect lower values.”

Registration fees are based on a percentage of the manufacturers’ suggested retail price on a car when it’s initially titled, and averages 5 percent to 6 percent higher than the actual price paid for the car. The annual fee drops slightly for the first three plates after the initial purchase for a total reduction of 25 percent by the fourth license plate tab. It never drops again.

Most Michigan drivers are well aware the registration fee is set in stone for older vehicles.

“We just bought plates for our car; they were over $114 for our 2001,” said John Bristol of Garfield Township, who also owns a 2006 van. “They’ve never gone down.”

Snyder proposes to raise $1.2 billion in road funding through increases in state gas tax and vehicle registration fees. He floated the idea of doubling the fee for the average car owner in 2011, but subsequent proposals now before the legislature call for increases ranging from 60 percent to 80 percent.

Sean Dye of Kingsley rides a motorcycle and said good roads are extremely important for those who travel on two wheels. But almost doubling registration fees would be tough, he said, considering the fee is based on the car’s original value.

A four- to five-year-old car is worth on average 30 to 40 percent of the original suggested retail value, said Alec Gutierrez, a senior policy analyst with Kelly Blue Book. A car that holds it retail value well, such as a Honda Civic, would be worth about 50 percent.

“You’re paying the full fee even though your car is withering away,” Dye said. “It’s probably not fair.”

A gas tax increase would a more equitable way to go, said Roger Snyder of Fife Lake.

“Doubling the fee is going to hit the older people on a fixed income and the people on the lower income scale harder,” Roger Snyder, said. “If you raise the gas tax they can drive less, but they still have to have a car.

“It only hurts people, it’s not productive,” he said.