News Story

40 Percent Of Whitmer’s 2020 Gas Tax Hike Won’t Support Roads

It backfills money governor would remove from transportation budget to pay for other state spending

A large portion of the 45-cent increase in the state gas tax proposed by Michigan Gov. Gretchen Whitmer will not go to the state’s transportation budget, according to an analysis by the Mackinac Center for Public Policy.

If approved by the Republican-controlled House and Senate, Whitmer’s proposed 45-cent motor fuel tax increase would occur in three separate 15 cent tax hikes on Oct. 1, 2019, April 1, 2020, and Oct. 1, 2020.

The first two tax hikes would increase the tax by 30 cents and bring in an additional $1.26 billion during the 2019-20 fiscal year. But documents submitted by Whitmer as part of her executive budget recommendation on Tuesday indicate that the net increase to transportation funding will be just $764 million in the 2019-20 fiscal year.

In other words, $499.2 million — an estimated 40 percent of the $1.26 billion gas tax increase in 2020 — would not go to roads. Instead, it would replace current transportation budget dollars that would be redirected to pay for other state government spending.

Some $325 million of the difference comes from removing income tax revenue from the 2020 road repair budget, an amount that under current law will increase to $600 million in the 2020-21 and successive road budgets. This money was earmarked to roads as part of a road funding package enacted in late 2015 after another all-tax road repair measure that was placed on the ballot by a previous legislature was defeated by voters earlier that year. The income tax earmarked for road repairs represented a commitment by then-Speaker of the House Kevin Cotter and House Republicans to not approve another all-tax road fix proposal, and instead reprioritize some other non-transportation state resources to roads.

Other than ending the $325 million income tax earmark, the budget documents released by Whitmer on Tuesday are not clear on where the rest of the $499.2 million coming out of the Transportation budget is coming from. The difference between how much the tax increase will bring in and the overall increase in transportation spending appears in those executive budget documents.

Whitmer called Michigan's roads “downright dangerous,” according to WJRT-TV. Despite this characterization, $499.2 million of the gas tax increases she proposes will not end up in the state’s transportation fund.

The analysis was done by James Hohman, director of fiscal policy at the Mackinac Center for Public Policy.

Whitmer’s office didn’t respond to an email seeking comment.

“The governor’s budget is a political wish list funded by much higher taxes on the people of Michigan,” said Sen. Aric Nesbitt, R-Porter Township. “Road funding has increased to a record level, and a solid boost would have been to direct all taxes on fuel to fixing our roads.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.