Everything we know about the Michigan roads plan

Michigan motorists would typically pay about $20 more for their vehicle registration fees and spend about $1.17 more for a 15-gallon fill-up under fee and tax increases passed Tuesday by the Michigan Senate and House of Representatives, as part of a $1.2-billion road-funding plan.

The bills go to Gov. Rick Snyder for his signature.

Q: So should the roads significantly improve under this plan?

A: Not right away. Although it's called a $1.2-billion road-funding plan, the package doesn't actually raise that much extra money for transportation until 2020-21. According to a Senate Fiscal Agency analysis, the plan increases transportation funding by $452 million in the 2017 fiscal year, $608 million in 2018, $763 million in 2019, $944 million in 2020, and $1.2 billion in 2021.

Also, the plan puts the first $100 million each year in new road revenue into a "lock box." That money isn't intended to be spent until a committee comes up with plans for the Michigan Department of Transportation to buy better roads that will last 50 years.

Q: Why are Michigan Democrats so opposed to this plan?

A: Democrats say a greater burden of the higher taxes and fees should be borne by businesses who have benefited from about $2 billion in tax cuts since 2011, and by the commercial trucking industry, which enjoys the highest-in-the-nation truck weight limits. They also say that because the plan relies on $600 million a year from the state general fund and provides for an income tax rollback, the effects of which can't be predicted with certainty, it will take needed money away from priorities such as education and public safety.

According to the Senate Fiscal Agency, the plan would cut the state general fund by $356 million in 2019, $531 million in 2020, and $806 million in 2021. That's all prior to the start of the income tax rollback, in 2023.

Q: Once the plan is fully implemented, does the entire $1.2 billion go to roads?

A: No. The $600 million raised from the higher fuel taxes and registration fees gets funneled through a state formula under which about 10% of it is spent on transit and rail projects. Also, a provision in the bill allows the City of Detroit to spend up to 20% of its new transportation money on public transit, which is a great need in the city. The $600 million per year to be taken from the general fund would all go to roads.

Q: Is Gov. Snyder likely to sign the plan?

A: The plan relies on general fund revenue more than the governor would like, but Snyder has given every indication he intends to sign it as a compromise with Republican lawmakers.

Q: What's the main difference between the new Senate plan and the one the House passed earlier?

A: This plan hikes vehicle registration fees by 20%, or by about $20 per vehicle, starting Jan. 1, 2017. The original House plan hiked registration fees by 40%, with the increase taking effect one year earlier, on Jan. 1, 2016.

The plan passed Tuesday has a higher fuel tax increase, one of 7.3 cents per gallon, effective Jan. 1, 2017. The House plan increased taxes on regular fuel by only 3.3 cents per gallon, effective Oct. 1, 2018.

Both plans equalize the taxes on diesel and regular fuel and tie future increases to inflation.

And both plans provide for fee increases of between $30 and $100 for hybrid electric vehicles and between $100 and $200 for non-hybrid electric vehicles.

Q: Are the tax relief elements in the two plans also different?

A: Yes. The sweetening of the Homestead Property Tax Credit, expected to cost the state treasury about $200 million a year, is pretty similar under both plans, with the maximum credit increasing to $1,500 per year from $1,200. But the plan passed Tuesday allows more people to qualify for the credit over time, through a change in the eligibility threshold tied to inflation.

There's also a significant difference in the income tax rollbacks in the two plans.

The final plan provides for an income tax rollback starting on Jan. 1, 2023, with Michigan's personal income tax rate decreasing only if general fund growth exceeds the rate of inflation multiplied by 1.425.

That's more restrictive than the income tax rollback in the House's plan, which would have taken effect starting Jan. 1, 2019, as long as general fund growth exceeded the rate of inflation, regardless of by how much.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.