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Infrastructure Funding Package Gains Legislature’s Approval

12/22/2014

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Important 1 Percent Sales Tax Increase to be Decided by Voters in May
In a twenty hour marathon session, which began Thursday, December 18 at 10 a.m. and ended Friday, December 18 at 6 a.m., the Michigan House and Senate passed a multiple-bill package that would implement the plan for additional infrastructure transportation funding laid out by the Governor on December 17.  The chambers also passed a joint resolution that would place a 1% increase to the state’s sales tax on the ballot in May. 

After several hours, and one failed attempt, the Senate voted to adopt the resolution with eleven of the twelve members of the Democratic caucus joining fifteen Republicans.  In addition to increasing the state sales tax, the ballot proposal will include barring School Aid Funds from being spent on public universities and removing the sales tax on motor fuel.  Implementation of the package is tie-barred to passage of the ballot proposal.  Highlights from the legislative package are as follows:


  • Beginning October 1, 2015, the 19 cents per gallon gasoline tax and the fifteen cents per gallon diesel tax would be eliminated and replaced with a 14.9% tax on the wholesale price.  There would be a floor and ceiling in place ensuring the tax doesn’t swing too much in either direction when fuel prices change.
     
  • The Earned Income Tax Credit would be restored to the 2010 level, setting it at 20% of the federal earned income tax credit.  This was a huge win for the Democratic caucuses who have been fighting to restore the credit to 20% since it was lowered to 6% in 2011.
     
  • Vehicle registration fees would increase next year, as would the fees for heavy trucks.  There would also be a fee for electric and hybrid vehicle owners and the depreciation schedule for vehicle registration fees would freeze.
While not tie-barred to the ballot proposal, the legislature also passed the “Main Street Fairness Bills” that would mandate a company with a nexus in the state to collect sales tax on internet purchases.

The package is expected to raise the additional $1.2 billion needed for the state’s crumbling infrastructure, as well as additional funding for public education and local governments.  Governor Rick Snyder is expected to sign the legislation on December 29.


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