Gov. Snyder tour poor road condition of Lodge Freeway in Detroit

A 60 year-old 300-ft section of the Lodge Service Drive and Meyers Rd is torn up exposing the poor condition of the surface on the infrastructure of the structure of Dec. 1, 2014. (Tanya Moutzalias | MLive.com)

(Tanya Moutzalias)

LANSING, MI — Michigan Speaker of the House Jase Bolger's plan to fund repairs to Michigan's roads could see the state School Aid Fund lose out on hundreds of millions of dollars by 2020, according to a new study.

The plan, first floated last week by the Republican leader, would phase out the sales tax on gasoline and phase in an increase in fuel taxes, which would go toward road repairs and keep gas prices about the same.

Mitch Bean, an economist with Great Lakes Economic Consulting and former director of the Michigan House Fiscal Agency, said his projection of Bolger’s plan shows the School Aid Fund would miss out on $800 million in potential revenue by 2020. Bean called that number a projection based on “reasonable assumptions.”

Bean also looked back at the last decade and applied Bolger’s proposal to past budget years. He said that if Bolger’s plan — which would eliminate the sales tax on gas and increase the wholesale tax on gas, putting all that money toward road funding — the School Aid Fund would have lost $623 million.

“That’s about $415 per student,” Bean said. “That’s a lot.”

There are currently two different types of state taxes on gasoline sold in Michigan: Sales tax, which goes to schools and local governments, and the Michigan Fuel Tax, which goes to roads.

The Michigan Senate passed a plan to fund work on Michigan’s roads in mid-November that wouldn’t have any affect on the School Aid Fund, General Fund or Michigan’s revenue sharing system. Bolger’s plan would affect all three.

Ari Adler, Bolger’s press secretary, said the decrease in funding for the School Aid Fund would be replaced with funds from non-gas sales tax. He said the non-partisan House Fiscal Agency has predicted economic growth and the School Aid Fund could expect significant increases as a result.

“Mitch Bean’s analysis was flawed from its very inception because he tries to say what would happen under the Speaker’s road proposal if it had been in effect for the past 10 years,” Adler said in an email to MLive. “But many of the past 10 years were part of Michigan’s Lost Decade, when the economy was suffering from out-of-control state government spending and mismanagement, among other things.”

Great Lakes Economic Consulting describes itself as a non-partisan firm that conducts fact-based analysis.

Bean described Bolger's plan as a six-year phase out of the sales tax on gas and a six-year phase in of a 6 percent tax collected on the wholesale price of gas. Currently, 73 percent of the sales tax collected from gas is constitutionally required to go to the School Aid Fund. That amount is projected by the House Fiscal Agency to be $553,753,895 in the current 2015 fiscal year.

Bolger’s plan would take that money and put it all toward road construction funding. By the time the plan was fully phased in, it would raise an estimated $1 billion for roads by 2020.

Bean applied that 2020 scenario to each year from 2004 to 2013. Under this analysis, the School Aid Fund would have lost as little as $57 million in 2004 and as much as $623 million in 2013. In 2009, the School Aid Fund would have actually ended up $404 million in the black.

In response to the assertion that the study takes into account an unusual economic downturn in the state, Bean said the numbers from the last few years — when Michigan’s economy improved and the Great Recession ended — are the most bleak.

“If this (money) hadn’t gone into school budgets, where would we be now?” Bean said, pointing out that 56 Michigan school districts are currently operating with a deficit.

Adler said the proposal is based on projections from the non-partisan House Fiscal Agency which show a “significant increase in funding for the School Aid Fund in future years, even after the sales tax on gasoline is more appropriately dedicated to repairing roads and bridges,” Adler said.

But, Bean said the assertions that economic growth would make up for what was lost in funding simply didn’t add up.

“All you’re doing is reducing funding for three sources by $850 million and transferring it to transportation,” Bean said. “The idea that that has no negative impact on where you’re getting that $850 million from is just silly.”

The report’s findings have concerned various school groups.

Jennifer Smith, assistant director of government relations for the Michigan Association of School Boards, said Bolger’s plan is setting off alarm bells for many. She said economic growth might only offset one-third of what Bolger’s plan would cut.

Smith pointed out the fact the Michigan Constitution guarantees that schools receive money from sales tax, including collections on gasoline. Any constitutionally-guaranteed money that is cut from the School Aid Fund needs to be replaced by funds that are also constitutionally guaranteed, she said.

“The report shows very clearly the schools will be heavily affected by this in a very negative way,” she said.

Kyle Feldscher is the Capitol education and MSU reporter for MLive Media Group. Reach him via email at kylefeldscher@mlive.com or follow him on Twitter at @Kyle_Feldscher. Read more stories here.