News Story

Whitmer Suggests Government Shutdown If No Big Gas Tax Hike

Democratic Governor challenges GOP legislature, my way on the highways

Gov. Gretchen Whitmer’s proposed 45-cent per gallon, $2.5 billion motor fuel tax increase has been represented as a plan to spend $2.5 billion more on roads. Bridge Magazine reported the plan would “increase state road funding by $2.5 billion by 2021.” The Small Business Association of Michigan said the plan would “raise $2.5 billion for roads.”

And the budget overview section of the governor’s recent executive budget presentation states, “This plan will generate $2.5 billion in new annual transportation revenue.”

What has not been widely reported is that just $1.9 billion of the $2.5 billion tax increase would go to road repairs. About $600 million of the tax hike, if enacted, would cover government spending that is unrelated to roads and transportation.

Whitmer’s executive budget recommendation for the next fiscal year proposes total state spending from all sources of $60.2 billion, up from $56.8 billion authorized in the final budget signed by her predecessor, Republican Rick Snyder.

Whitmer justifies the motor fuel tax increase by saying she was elected by Michigan voters who want her to “fix the damn roads.” If passed and signed into law, the proposal would give Michigan the nation’s highest gas tax.

Fiscal analyst James Hohman at the Mackinac Center for Public Policy is one voice who has noted the discrepancy between how much the governor expects the tax hike to bring in and how much of that she plans to use on road repairs.

“Whitmer is insisting she needs $2.5 billion in higher gas tax revenue, but only wants $1.9 billion more in additional road funding, and that is worth pointing out,” Hohman said in an email. “It looks like the governor wants more money in government and is trying to use the roads to leverage it.”

Hohman added, “The 2020 state budget already contains a ‘road funding piece’: An income tax earmark to road repairs is scheduled to increase from $264 million to $468 million.”

This refers to a law enacted alongside the last gas and diesel tax hike in 2015, which raised these taxes by 7 cents per gallon and 11 cents per gallon, respectively, to 26.3 cents per gallon tax on both fuels. Then-House Speaker Kevin Cotter insisted that the state government, and not just taxpayers, shares some of the burden of reprioritizing more resources to road repairs. The result was the income tax earmark from general government spending to road repairs, which, starting in October 2020, rises to $600 million annually.

The governor’s proposed gas tax hike has not gone over well with Republican lawmakers, nor has Whitmer’s statement that she won’t sign a new budget without one. Senate Majority Leader Mike Shirkey, R-Clarklake, says they’re two separate issues.

While it is too early in the process to start talking about a year-end budget impasse, Whitmer is using language that suggests this is possible.

“They want honesty in budgeting, and they want real solutions, not half-measures and shell games. And that’s exactly what I put on the table,” said the governor in a MIRS News podcast last week, during which she also reiterated that she would not to sign a budget that doesn’t include a comprehensive road funding solution.

Shirkey’s press secretary, Amber McCann, responded to Whitmer’s accusations in a statement to MIRS News. "She’s in luck. There’s an entire Department of Transportation portion of the budget."

House Speaker Lee Chatfield, R-Levering, agrees that passing an annual budget and devising a long-term solution to road repair funding are two separate issues.

“We are currently spending a record amount on roads and are serious about further investing the right amount to fix the problem. But if that doesn’t qualify as a fix, I could put her gas tax hike on the board and watch it fail,” Chatfield said in a statement to The Detroit News.

Whitmer’s office did not return requests for comment.

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.