LANSING, MI -- Michigan motorists already pay one of the nation's highest effective tax rates on fuel and could be asked to pay even more at the pump under a road funding model proposed by Gov. Rick Snyder.
The governor, in his fiscal-year 2014 executive budget released last week, called for $1.2 billion a year in new funding to keep old roads from going from bad to worse. By investing $12 billion over the next decade, he told lawmakers, the state can avoid a $25 billion bill.
To reach that goal, Snyder proposed a wholesale tax on gasoline and diesel fuel at the equivalent rate of 33-cents per gallon over the next two years, followed by a floating rate designed to keep pace with market conditions. Additionally, he proposed increasing annual registration fees by 60 percent on light vehicles and 25 percent on heavy trucks and trailers.
Overall, Snyder's office says the increased taxes and fees would cost the average Michigan family $120 a year per vehicle but save them up to $80 in annual repair costs.
While the governor's plan may not fly with state lawmakers -- including Senate Majority Leader Randy Richardville, who has openly stated his opposition to the gasoline tax -- it sets the stage for several months of discussion and debate.
With that in mind, MLive took a closer look at Michigan's current gas tax structure, as described by the House Fiscal Agency, exploring why our
roads are getting worse even as motorists here pay more in at-pump taxes than in many other states.
Part of the reason, according to Lance T. Binoniemi of the Michigan Infrastructure and Transportation Association, is that the state collects sales tax on fuel but does not earmark any of that revenue for roads.
"It's the biggest public policy problem we have," Binoniemi said today during a joint session of the Senate and House transportation committees. "The general public does not understand that the 6 percent tax does not go to funding roads and bridges. When you include that sales tax, we probably do have one of the highest (gas tax rates) in the nation."
Below, you'll find the different costs that would result in $4 per gallon of gasoline, a nice round number that also happens to be a projected reality.
Base retail price: $3.41
Notes: This is a hypothetical base price that a motorist would pay for a gallon of gasoline absent any state or federal taxes.
Federal fuel tax: 18 cents
Running cost: $3.59
Notes: The federal government imposes an 18.4-cent per gallon excise tax on gasoline and a 24.4-cent tax on each gallon of diesel. The U.S. Department of Treasury collects the taxes from fuel suppliers, not retailers. The revenue goes toward the Federal Highway Trust Fund, which is redistributed to states for highway and public transportation projects.
State sales tax: 22 cents