House Speaker Kevin Cotter speaks about roads

House speaker Kevin Cotter addresses the media about road funding at the State Capitol in Lansing Wednesday, May 13, 2015.

(Danielle Duval | MLive.com)

LANSING, MI -- Michigan House Speaker Kevin Cotter on Wednesday unveiled a long-term plan to fund new road repairs without a major increase in the gas tax or the sales tax.

Instead, the plan would dedicate future revenue growth, re-prioritize some restricted funds, raise diesel taxes to match gas, create new fees on electric and hybrid vehicles and eliminate the Earned Income Tax Credit.

Cotter, who unveiled the plan alongside Republican colleagues at the Michigan Capitol, said it would eventually boost road funding by up to $1.05 billion a year.

"The people want a solution that fixes the roads and doesn't do a lot of other things," said Cotter, R-Mt. Pleasant, referring to last week's voter rejection of Proposal 1.

"I heard them say fix the roads, but just fix the roads. I think we can learn from that."

The House plan is largely dependent on projected revenue growth. It would dedicate $350 million in new general fund money to roads in 2016 and up to $700 million by 2018. The new funding would go to state and local road agencies, bypassing the traditional formula that also includes mass transit.

While Proposal 1 would have expanded the refundable Earned Income Tax Credit to provide relief to low-wage workers, Cotter's plan would eliminate the state version altogether for a projected savings of $117 million.

"We are (currently) taking tax dollars from some taxpayers and giving them to others, and here we are putting them into roads," said Cotter.

Roughly 780,500 taxpayers received the Michigan EITC in tax year 2013, according to the state Treasury, with the largest credits going to filers who earned between $15,000 and $20,000.

Democrats are sure to oppose any attempt to scale back the EITC, which supporters champion as a hand up for the working poor.

"All the predictions about paving the roads with poor people if Proposal 1 failed have come true," said state Rep. Brandon Dillon, D-Grand Rapids.

Dillon, who sits on the House Appropriations Committee, also suggested that the plan should be referred to what he's previously called the "committee on hocus pocus."

"Basing a plan around projected economic growth is laughable on its face," he said. "It's not going to work."

House Appropriations Chair Al Pscholka, R-Stevensville, disagreed, saying the plan would dedicate roughly half of the projected general fund revenue growth to roads.

"I think this is a good starting point," said Pscholka. "I think it's a good place for the House to be. I think the House is saying look, we're going to do whatever we can to find the money from resources that we already have."

Some of those resources are state-restricted funds that the Michigan Economic Development Corporation currently uses to encourage economic development.

"I think a prerequisite to economic development is to have roads that are at least in reasonable condition," said Cotter. When businesses consider where to locate, having "roads that look like bombing ranges" won't help Michigan.

Cotter's plan would redirect $75 million in tobacco settlement revenue from the 21st Century Jobs Fund, along with $60 million in tribal gaming compact revenue. It would also cut all $50 million out of the state's film incentive program.

Tapping those funds may be difficult, requiring changes in state statute and potentially impacting the state's tribal contracts.

The House plan, which also calls for more road warranties and competitive bidding, will total 12 bills, according to Cotter spokesperson Gideon D'Assandro. The package will likely be introduced Thursday or next week.

Michigan Gov. Rick Snyder, who has spent the better part of three years advocating for additional road funding, has long pushed for new revenue to be part of the equation.

Asked Wednesday about Cotter's plan, spokesman Dave Murray noted that the governor "has said it's important to look at all ideas that are put on the table. The speaker has put together a thoughtful plan and we will need time to review it."

The Michigan Senate is likely to unveil its own roads plan "in the next couple of weeks," according to Floor Leader Mike Kowall, R-White Lake, who announced this week that the upper chamber will stay in session this summer to continue seeking a solution.

"It won't be anything rash, believe me," Kowall said after session on Wednesday morning. "It's going to be well thought out."

The road funding debate may delay completion of next year's fiscal budget, according to Kowall. The state Legislature has finished the budget by early June in recent years, but Kowall the process could stretch out to early July this time around.

"We're shaking all the cushions out and we're checking down behind the couch to see what kind of funding we can find," Kowall said.

Jonathan Oosting is a Capitol reporter for MLive Media Group. Email him, find him on Facebook or follow him on Twitter.