Michigan road funds deal in doubt this session; Snyder says talks 'not just going in circles'

Energy Associated Press

Gov. Rick Snyder and legislative leaders meet Wednesday to continue negotiating a potential tax increase to improve Michigan's roads, as chances rise that no deal will be struck before lawmakers adjourn for the year.

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Thursday is the final voting day of the two-year session, and top legislators are running out of time to pitch a compromise proposal to rank-and-file members of the Republican-led Legislature. The Senate and House approved vastly different plans after the November election.

One would more than double gasoline and diesel taxes over four years. The other would eliminate the sales tax on fuel within six years and increase per-gallon gas and diesel taxes by the same amount, averting a tax increase by moving money for schools and local governments to road and bridge construction.

Another bill pending in a House-Senate conference committee could boost license plate revenue by no longer letting registration fees drop by 10 percent a year for the first three annual plate renewals.

Snyder and legislative leaders say at least $1.2 billion more a year is needed to bring highways, streets and bridges up to par. Vehicle registration fees and taxes at the pump currently account for $2 billion in annual transportation infrastructure spending. But other than agreeing on the amount needed and that the state's flat per-gallon fuel taxes should be based on wholesale prices instead, they have sharp differences.

Republican House Speaker Jase Bolger does not think the entire $1.2 billion should come from new taxes and wants to make sure all taxes at the pump pay for transportation projects. The GOP governor, Republican Senate Majority Leader Randy Richardville and Democrats worry about harming K-12 and municipal budgets as a result.

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Negotiators are cautious about boosting fuel taxes too high and making sure a tax increase does not disproportionately affect lower- and middle-class taxpayers, Snyder said. There also is talk of the Legislature giving voters the chance to consider a ballot issue as an alternative to what, if anything, wins approval this week.

"If you go through that list of criteria, it's really how do you take the House plan, the Senate plan and come up with a compromise that can check the boxes that meet those needs," Snyder told reporters. "Some of those criteria matter more to some of the leaders than others."

Despite the lack of much progress, Snyder insisted talks are "moving forward" and "we are not just going in circles."

Bolger said it is "a difficult issue that's gone unresolved for a couple decades."

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