Bill introduced to dedicate nearly $800m to road repairs without raising taxes
RELEASE|March 6, 2020

Speaker of the House Lee Chatfield today lent his support to a new package of bills that would help fix Michigan’s crumbling roads and bridges without a 45-cent per gallon gas tax increase.

The bipartisan reform is included in House Bills 5582-5587, which were introduced Wednesday. The bills would eliminate the sales tax on fuel and replace it with an equivalent, revenue-neutral tax on fuel dedicated solely to roads. The bills also include strict protections to hold school funding harmless from any change.

Additionally, all revenue collected by the replacement tax at the pump will be dedicated specifically to local road funding, filling a gap left behind in the governor’s road bonding scheme. The administration’s proposal took on $3.5 billion in new one-time debt to be spent on only state-owned roadways, which are about 8% of Michigan roads. This revenue-neutral change will result in approximately $800 million annually in additional funding for the other 92% of roads that connect driveways to highways in every corner of the state.

“Michigan has tried bonding for roads, and it has tried raising taxes. Neither has solved the underlying problem, and the new bonding scheme introduced last month won’t be any different,” said Chatfield. “We need to make sure the funding we already have is spent correctly before we simply throw more money at the problem and watch it get sucked away into other projects. This reform will finally fix this mistake.”

The following bills are a part of the package of legislation:

  • HBs 5582 and 5583, introduced by Appropriations Committee chair Shane Hernandez, and HB 5584, introduced by state Rep. Sara Cambensy, would eliminate the sales tax on fuel over three years.
  • HB 5585, introduced by Transportation Committee chair Jack O’Malley, would create the revenue-neutral replacement tax on fuel.
  • HB 5586, also introduced by Rep. O’Malley, would hold the School Aid Fund harmless from any change in tax collections because of this reform.
  • HB 5587, introduced by state Rep. Mike Mueller, would direct all revenue collected through the revenue-neutral replacement tax to county, city and village roads.

The bills were referred to the Appropriations Committee for consideration.

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