Rising Economy Increased Michigan Tax Revenue More Than Gas Tax Hike

With different priorities, Legislature could have spared motorists big road tax hikes

Earlier this month, Michigan’s Senate Fiscal Agency, House Fiscal Agency and the Treasury Department estimated the state will collect $764.8 million more in General Fund and School Aid Fund tax revenue next year. The increase is compared to a previous estimate, on which the current state budget was based. Next year’s budget will be based on the new estimate.

That earlier estimate, made in May 2016, projected the state would collect $22.5 billion this year in these funds. The January 2017 consensus projects the state will collect $23.3 billion for these funds in the next fiscal year, which begins Oct. 1.

How large of an increase is $764.8 million? It’s more than the tax hikes passed in 2015 to pay for more road repairs.

Michigan motorists began paying those higher road taxes earlier this month. They include a 7.3 cents per gallon hike in the gas tax and a 20 percent increase in vehicle registration (license plate) taxes. Together, these two tax hikes will bring in $634 million more this year. State government will receive that increase as well as the $764.8 million increase projected for School Aid Fund and General Fund Revenue.

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