Michigan Senate rejects tax hike for road repairs

LANSING, Mich. (AP) - The defeat of an effort in the Republican-led state Senate to more than double Michigan's gasoline tax has left lawmakers scrambling to pass a scaled-back plan to improve deteriorating roads on their last day before adjourning for much of the summer.

After a marathon 15-hour session, senators broke early Thursday morning without approving a measure that would gradually increase the 19-cents-a-gallon gasoline tax to 41 ½ cents within five years. They also could not muster enough support to switch from a flat per-gallon tax to one that would fluctuate with price to keep transportation revenue on pace with inflationary construction costs.

Senators will return midmorning Thursday to try again on the second proposal, which is similar to one approved by the GOP-controlled House in a bipartisan vote last month.

It would tax 7 percent of the wholesale, or "rack," price of fuel, keeping the per-gallon gasoline tax at about 19 cents and bringing the 15-cents-per-gallon diesel tax in line with the gas tax. The tax could rise or fall no more than 5 percent in future years to account for major year-to-year fluctuations in price.

"As the price of gas goes up, we just make sure the same purchasing power stays there," said Senate Majority Leader Randy Richardville, R-Monroe.

The Senate's defeat of the main road-funding bill was a blow to Richardville and others, including Republican Gov. Rick Snyder, who say at least $1.2 billion more per year is needed to bring roads up to par or else the system will fall further into disrepair. It was not clear exactly how much money the scaled-back plan — including other measures approved Wednesday and last week — would generate, but it would be well short of the original proposal.

Richardville said work on a long-term structural fix, assuming it is out of reach Thursday, will continue in the summer and fall.

Democrats agreed to vote for the significant gas tax hike in exchange for tying it to an expanded tax break for lower- to middle-income homeowners and renters — which is now on hold. Senate Minority Leader Gretchen Whitmer, D-East Lansing, said Democrats did not support the second plan.

"It's ridiculous to pretend that is some sort of solution when it's the governor, it's the majority who have said we've got to actually address this and have a full fix," she said. "This is an embarrassment, and it's a failure of leadership."

Eight of 12 Democrats supported more than doubling fuel taxes, she said, while nine of 26 Republicans did so.

Michigan spends less per driver on roads than any other state, yet also has some of the country's highest taxes at the pump because the sales tax applied to motor fuel mostly goes to schools and local governments under the state constitution.

Earlier, senators soundly defeated a proposal to let voters in November raise the 6 percent sales tax to 7 percent if they did not like the gas tax hike if it was enacted.

"That's what democracy's all about. Let's put the two plans out there, and let's let the citizens of this state make up their own mind," said Sen. Bruce Caswell, R-Hillsdale, one of 13 Republicans to support the sales tax option along with a lone Democrat. Thirteen Republicans and 11 Democrats voted against the measure, with Democrats complaining it would hurt lower-income residents and some in the GOP saying they favor drivers paying at the pump for the roads they use.

The Senate did narrowly approve legislation to stop, starting in 2016, an automatic drop in license plate fees given to drivers in each of their first three annual plate renewals. After defeating the bill earlier in the day, the Senate amended it so drivers would not retroactively see their fees go up.

"It will not raise the same amount of revenue. However, the automobile owners in the state of Michigan will not see a pop-up in registration fees the next time they go back to the secretary of state and renew their license plates," said Sen. Howard Walker, R-Traverse City.

Republicans rejected a House-approved bill that would raise fees and fines on overweight trucks to help boost transportation funding.

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