Traverse City Record-Eagle

Michigan

June 7, 2014

What to know about gasoline tax debate

LANSING (AP) — Time’s running short if Michigan is going to raise a lot more money to improve bumpy roads — a long source of frustration for drivers.

Lawmakers plan to be in session just three more days before turning their attention to the August primary. And if nothing’s done next week, the likelihood of legislative action before the November election is slim.

A look at the issue that’s led to hours of recent closed-door meetings in the Capitol:

THE PROBLEM

Michigan spends less per driver on roads than any other state. It ranks 33rd in spending per lane mile and 47th per vehicle mile traveled, according to a state Transportation Department review of 2012 Federal Highway Administration Data.

Yet Michigan also has some of the country’s highest taxes at the pump, about 10 cents-a-gallon above the national average. That’s because the 6 percent sales tax is also applied to motor fuel but mostly goes to schools and local governments under the state constitution.

CONTRIBUTING FACTORS

Flat per-gallon fuel taxes — 19 cents for gasoline, 15 cents for diesel — are faulted for declining state transportation revenue as people drive less and with more fuel-efficient vehicles. The gas tax was last increased, by 4 cents, in 1997. Though vehicle registration and title revenue is up, it hasn’t offset the drop in fuel tax revenue — a problem given inflationary construction cost increases.

HOUSE SOLUTION

The Republican-led House last month voted to tax fuel at 6 percent of the wholesale price and effectively keep the 19-cent rate intact to start. If fuel prices rise from one year to the next, the tax could rise by whatever is less — 1 cent, 5 percent or the annual change in highway construction costs.

Gas and diesel taxes could ultimately go as high as 32 ½ cents a gallon, though it could be decades before the ceiling is hit.

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