Republican Senators Propose Sales Tax Increase for Roads

Michigan Capitol Confidential ^ | 1/22/2016 | Jack Spencer

[MichCapCon]

Sen. Ken Horn, R-Frankenmuth, has introduced "dead on arrival" legislation that would replace the road funding plan Gov. Rick Snyder signed into law in November with a sales tax hike. The tax increase, from six to seven percent, would be the same as was in Proposal 1, which Michigan voters rejected last May by more than an 80 to 20 percent margin.

Horn said that the plan he outlined in Senate Joint Resolution M is less complicated than the ill-fated Proposal 1. It would repeal the recently passed and enacted road funding plan, hike the sales tax rate and dedicate all new revenue from the increase to roads.

“After the debacle of Proposal 1, the Senate worked very hard on this issue,” Horn said. “There was polling and studies — I think one was by the Business Leaders of Michigan — showing that 72 percent of voters would likely have voted for Proposal 1 if it had been a simple sales tax increase with all the money we pay at the pump going to roads.”

Senate Joint Resolution M would need to be passed by a two-thirds vote of both the House and Senate and then be approved by voters in a statewide election. Its chief sponsor, though, does not see that happening.

“Frankly, I don’t expect this legislation to move forward,” Horn said. "It is legislation I put in for the people I’ve talked with in my district who weren’t happy about what we ended up doing on road funding.”

Just two months ago, the governor and the Legislature agreed to, passed and enacted a $1.2 billion road funding plan. It relies on increases in fuel taxes and registration fees for $600 million while tapping into existing revenues for another $600 million. It also bolsters the Homestead Property Tax Credit and includes the potential for income tax relief.

The deal came together after years of squabbling and the voters’ unambiguous rejection of Proposal 1, which raised the sales tax rate from six to seven percent. Because it was the result of legislative bargaining and deal making, Proposal 1 also included other provisions that raised its price tag to $1.9 billion.

Former Rep. Tom McMillin, who was among the leaders of Concerned Taxpayers of Michigan, a group that actively opposed Proposal 1, is skeptical of the idea that a clean tax increase would be popular.

If Proposal 1 had been a simple tax hike, with all the new tax money going to roads, “It might have only lost by 75 to 25 percent instead of 80 to 20 percent," he said. He added, “Maybe they would have gotten support from a few more Democratic voters. But basically, they would still have been asking voters to raise taxes on themselves.”

Does Horn think that Michigan voters are ready for another public debate on taxes and road funding?

“I’ve had some people in my district tell me they would rather have had the sales tax increase than the increases in the fuel tax and registration fee,” Horn said. “Basically, those who earn $70,000 a year or more are more impacted by a sales tax hike and those who make about $40,000 or less are the ones who don’t like the fuel tax and registration fee increases. So I put this in to simply repeal what we did and make that change to the sales tax. It’s only to show that we have that option and would only move if there was some sort of grass roots support.”

While Horn is the chief sponsor of Senate Joint Resolution M, three other Republican Senators have signed on as co-sponsors: Sen. Darwin Booher of Evart, Sen. Mike Green of Mayville, and Sen. Rick Jones of Grand Ledge.

“I can tell you this legislation is dead on arrival,” Jones said.

Jones added that Senate Majority Leader Arlan Meekhof, R-West Olive, has already told Senate Republicans that the legislation “isn’t moving.”

“Proposal 1 was overwhelmingly defeated because it was loaded down with a Christmas tree of stuff the voters didn’t want that the Democrats forced on us,” Jones continued. “I co-sponsored this legislation because there were so many people in my district who told me they’d rather have had the sales tax hike than the increased registration fee and fuel tax increase. I signed on to this to represent those constituents.”

Neither Booher nor Green returned phone calls to explain why they co-sponsored the resolution.

James Hohman, the assistant director of fiscal policy with Mackinac Center for Public Policy, said Senate Joint Resolution M represents the side of the road funding argument that sought additional dollars by means of tax hikes only.

“Senator Horn is correct that the sales tax would be less regressive than fuel and registration taxes,” Hohman said. “But the enacted roads plan also finds money from current revenue sources to pay for road improvements while his proposal funds the roads exclusively with tax increases.”

[cyclotic]

As a former Michigan lifelong resident now living in the People’s Republic of Maryland, I retain interest in the goings on there.

Michigan and Maryland both hired political neophytes and successful businessmen as Governor.

Michigan and Maryland both had tax and spend liberals as their previous Governors. Jenny Grandstand and martin Owe’Malley. Both ran their states into the dirt financially.

Governor Hogan has direct control of only 17% of the state budget. The liberal run legislature controls the rest of it with required spending bills. Yet, in one year, while battling cancer, Hogan took Maryland from a huge deficit to a $500,000 surplus. Perhaps Snyder should give him a call.

The republicans want to refund much of the surplus back to the citizens. Democrat are trying to figure out how to spend it. They are really that stupid.

[exnavy]

The problem is, Tricky Ricky is more like jenny grandtheft than governer Hogan.

[cyclotic]

I think Snyder also inherited a bigger problem. Michigan was in pure financial depression. Maryland barely got touched because 49% of the workforce is employed by local, state or federal government.

[exnavy]

Possibly, Snyders first solution to most problems is, higher taxes.

[fella]

A piece of RINO raises to the top of the political cesspool.

[joe fonebone]

bullcrap...bullcrap..bullcrap..

as a TAXPAYER, inother words, THE ONE WHO PAYS FOR THIS STATE TO FUNCTION, I demand only a few things...

law enforcement..
fire protection...
roads that I can drive on to GET TO WORK so that I can PAY MY TAXES without destroying 40k vehicle..

everything else comes second.. repeat..

EVERYTHING ELSE COMES SECOND...

time to put the taxPAYER first...

[TalBlack]

WHY on earth would anyone believe that this latest taking would go towards the roads?

[dsrtsage]

Perhaps if they used the money that was collected for the expressed purpose of maintaining the roads 100% on the roads. Better yet honest bids and no coerced prevailing wage

[doldrumsforgop]

ZERO increase in tax dollars until the existing tax dollars are proven to be spent wisely.

This is called zero-based budgeting and it is so necessary at state and federal levels.

I worked in the 60s for a Department of Commerce entity created by LBJ in the Great Society to temporarily solve some economic issues of several low income communities.

Almost 50 years later, it still exists, with a lot of its budget to justify its existence.

These never die, unless a silver stake is driven through the heart.