Pressure builds on Michigan Republicans for roads plan to avoid shutdown

August 29, 2019: Michigan House Dem leader says Whitmer’s 45-cent gas tax is probably dead

With just over a month to go until the Oct. 1 deadline for a completed state budget and roads funding plan, pressure is building on Lansing Republicans to offer their own vision for funding more than $2 billion in Michigan road and bridge repairs. 

Democratic Gov. Gretchen Whitmer is scheduled to meet with Senate Majority Leader Mike Shirkey and Speaker of the House Lee Chatfield, both Republicans, to discuss options on Thursday.

“At this juncture, I’m expecting the Republicans to finally come with an alternative,” Whitmer told reporters Wednesday afternoon. “And we’ll see what it is.”

She’s referring to an alternative to the proposal she introduced in a budget presentation in March: a 45-cent-per-gallon increase in the state gas tax to fund around $2.5 billion in additional annual funding experts agree is necessary to fix the state’s crumbling roads and infrastructure. Republicans call her plan a non-starter, while Whitmer and others insist significant new revenue is needed to fix the state’s infrastructure. 

Even state business leaders — traditionally strong allies of Republican lawmakers — are signaling a revenue-neutral path won’t cut it.

Republicans insisted Wednesday they have offered alternatives. 

“They gave her a couple of different ideas and alternatives a while back and she’s been sharing some of her thoughts and making counter proposals, but at this point they’re not limiting the discussion to any one thing,” Gideon D’Assandro, spokesman for the House Republicans, told Bridge Magazine. He wouldn’t specify what those options are.

“A lot of ideas are on the table and they’re going to work together to find the best plan.”

In a radio interview with WJR-AM last week, Shirkey said he, Chatfield and Whitmer will be ready to announce “the general direction” of a roads proposal by the end of August. Senate Republican spokeswoman Amber McCann confirmed that they’re still on track to reach a compromise by then, while D’Assandro said “there’s no sort of timeline” on the discussions. 

Negotiations have gone on long enough that state business leaders are calling for compromise: At a press conference hosted by the Michigan Chamber of Commerce, Business Leaders for Michigan, the Grand Rapids Chamber of Commerce, the Detroit Regional Chamber and others Tuesday, leaders said the governor has correctly identified the scope of the problem. 

“We’re here today because we think the time now has come where we need to get this mission over the finish line. We can’t do it without new revenue — substantial new revenue,” said Business Leaders for Michigan President and CEO Doug Rothwell. “Without good roads were not going to be able to continue to grow this economy.”

Meanwhile, officials in the State Budget Office have indicated it may soon be time to start preparing for a government shutdown, which would occur if a deal isn’t reached by October 1 when the next fiscal year begins. Kurt Weiss, spokesman for the office, told Gongwer, a subscription news service that covers state government, that the budget office will eventually need to begin notifying agencies about the protocol of a shutdown, including which workers are essential and which are non-essential. 

“At this point, we here in the Budget Office have not reached out to the departments and agencies to begin any planning,” Weiss told Bridge via email. “We are hoping to see a transportation plan from the Legislature this week” before beginning preparations. 

What’s on the table

Shirkey has said he recognizes the need for extra funding (read: more taxes of some sort) to bring the roads up to par, though he doesn’t agree Whitmer’s 45-cent gas tax increase is the right solution. 

“He hasn’t settled on how much (new revenue will be needed), but he personally believes it will be part of the equation,” said Amber McCann, spokeswoman for the Senate Republican caucus.

The Senate-proposed budget would accelerate a 2015 gas tax planby putting $132 million more into roads this year. However, that still leaves more than a $2.3 billion gap to fully-fund road repairs. 

Chatfield, the House leader, argues it’s possible to find the money for roads repairs in existing revenuesfrom other parts of the state budget. He’s pushed for eliminating the sales tax (which is constitutionally dedicated primarily to schools and local government) on gasoline to ensure all money spent at the pump goes to roads. 

The House-proposed budget makes room for eliminating the sales tax on gas — which would require separately-passed legislation — by accounting for around $542 million in new fuel tax money taken from what would have been sales tax. When the proposal is fully phased in, it would generate around $894 million in annual revenue for roads; still around $1.6 billion short of necessary repairs.

In both cases, the governor has said she won’t sign a budgetthat doesn’t include more money for significant road fixes, nor will she support a plan that diverts funding for schools without a clear way to make up the revenue.

Other options Republicans have considered this summer: 

• A West Michigan Policy Forum proposal to issue a 30-year, $10 billion bond to fund the teacher pension system, freeing up as much as $900 million annually to replace lost sales tax revenue under the House proposal 
• Giving local governments the ability to levy local taxes and fees for road repairs by putting it on a ballot for voter approval, like a property tax millage 
• Promoting innovative materials or methods for building roads and maintaining roads for longer periods

Multiple people close to the legislative process have indicated it’s likely the roads and budget deal will be publicly announced after the governor has already signed on to the plan and they’ve rallied the votes in both chambers of the legislature. 

“We’ve got to make sure whatever we decide as a caucus, working with the House and the governor, is going to have enough votes to pass. That’s what we’re working on,” Sen. Wayne Schmidt, R-Traverse City and chairman of the Senate Appropriations Transportation Subcommittee, told reporters Tuesday.

“It’s not quite as easy as it has been the last eight years, but we’ve had a little change in the front office and we have to adapt to it. So that’s what we’re going to do.”