House Transportation Committee Discusses Options for a Long-Term Transportation Funding Solution
Last week, a transportation budget bill, Senate Bill 184, sponsored by Senator John Pappageorge (R-Oakland County), passed conference committee along to the legislature. The bill offers a short term solution for transportation funding in Michigan. SB 184 would allocate $19.3 million toward maintenance and operations of the now state-owned portion of the Wolverine Rail Line, $121.3 million for the federal aid match requirement by converting sales tax revenue to the State Trunkline Fund and $115 million for Priority Roads Investment- all steps toward a more comprehensive 21st century transportation system in Michigan. However, the debate over a long-term transportation funding solution for Michigan continues.
A large gap currently remains in answering Governor Rick Snyder’s request to increase transportation funding by $1.2 billion. In the June 4th House Committee on Transportation and Infrastructure meeting, Chair Representative Wayne Schmidt (R-Traverse City), included a package of bills on the committee agenda which address transportation funding.
House Bill 4630, sponsored by Representative Mike McCready (R-Bloomfield Hills), makes changes to the Michigan Vehicle Code, including a nominal increase in registration fees for all vehicles, an increase driver’s license renewal fees by $7 and the elimination of special registration rates for farm vehicles and historic vehicles. The bill received significant opposition by the Michigan Farm Bureau, they argued that farmers should pay reduced registration taxes, as they only use their vehicles for a portion of the year and because these vehicles generally only utilize public roads to get from one farm to another. Rep. McCready made the point that the transportation system needs to be maintained all year round- all users benefit from that constant maintenance. No vote was taken on the bill this week; however, it appears on the agenda again for the June 11 meeting.
House Bills 4358 & 4359, both sponsored by Representative Schmidt, would eliminate the current excise tax on gasoline, liquefied petroleum gas (when used for motor fuel) and diesel fuel and replace it with a wholesale tax, which would provide more stability in tax revenue and likely not affecting the price of fuel. Although these bills were on the agenda, they were not discussed in committee this week. Both bills are on the agenda for the June 11 meeting.
House Bill 4632, also sponsored by Representative Schmidt, would increase overall registration fees, eliminate special rates for motorcycles and impose additional fees on hybrid and electric vehicles (EVs). While there was no vote on the bill this week, the committee heard extensive testimony on it during the June 4 House Committee meeting and the supplemental meeting that took place on Thursday, June 6. Bill Hamilton, Senior Fiscal Analyst of the House Fiscal Agency, noted that if all of the seven million registered vehicle owners in Michigan pay the proposed tax increase, the Michigan Transportation Fund will have raised $70 million in the first year. By the fourth year, the proposed increase would raise MI transportation revenue by $140 million. While this increases revenue, the resulting increases equal only a small portion of Governor Snyder’s desired transportation fund increase and what will be needed to truly affect change in our transportation system.
HB 4632 sparked much conversation at Tuesday’s House Committee Meeting. Ryan O’Connor and Dan Frakes from General Motors, a major manufacturer of hybrid and electric vehicles and a major economic benefactor in Michigan, testified against the bill stating that this bill targets technologies that greatly improve Michigan’s economy and environmental sustainability. Further, they explained that the bill would have a minimal fiscal impact: “We understand the desire to create a fair share for everyone, but we don’t think that this (bill) will help with road funding. (Hybrids and EVs) haven’t even reached a scale where there are enough cars to make a big difference…We don’t believe our manufacturers and customers should be penalized for doing what is right”, O’Connor said.
Tim Fischer, Deputy Policy Director for the Michigan Environmental Council (Trans4M Core Member), echoed these concerns in his written testimony. He noted that hybrids and EVs make up ⅓ of 1% of all registered vehicles in Michigan, which means raising registration taxes would have a minute effect on the transportation budget. Fischer also explained that these technologies are not the only force behind the trend in vehicle fuel efficiency. Increasingly, vehicles are being made of lighter steel and more fuel efficient engines. Additionally, highlighted by both Fischer and GM representatives, hybrid technology doesn’t necessarily warrant the most fuel efficient vehicles. For example, traditional internal combustion engine vehicles, such as the Ford Focus get 26/36 mpg compared to the Chevrolet Tahoe Hybrid, which only gets 20/23 mpg. “It is tough to view this as something other than a penalty on specific technologies”, Fischer wrote.
Chris Hackbarth, Director of Government Affairs at the Secretary of State, also spoke on the impacts this bill would have on the Secretary of State. He began by stating, “The department has no personal value judgment on any of the earmarks in the act. Our request is simply, please make them as uniform as possible”. While Hackbarth stressed the benefits of how the bill would streamline the registration processes, he was not able to give answers to satisfy Rep. McCready’s questions on whether or not HB 4630 would tangibly save the Secretary of State money. The two had a short dialogue on this topic; while Rep. McCready was persistent on proving that the bill would create a cost-efficient, streamlined process, Hackbarth said that he was not sure that the new registration process would save money, but that it could possibly save the Secretary of State time and administrative costs.
With the legislature’s summer break quickly approaching, representatives are attempting to quickly push through a package of bills that will provide tangible solutions for the transportation fund and satisfy Gov. Snyder’s requests. Representative McCready has been open to amendment changes on HB 4630, so changes may occur before voting on the bill. Check back with Trans4M for updates on these bills that will shape the future of Michigan’s transportation budget.
Written by: Kajal Ravani and Liz Treutel, Trans4M Fellows