Democratic Gov. Gretchen Whitmer called Tuesday for nearly tripling Michigan’s per-gallon gasoline tax — and making the state home to the country’s highest fuel taxes — in order to improve aging roads that she warned would only get worse without a major influx of new spending.
The $2.5 billion plan would increase the 26-cent tax by 45 cents by October 2020. To alleviate the burden for some, she proposed a tax overhaul under which retirees and low-income earners would get breaks while more businesses would pay corporate income taxes.
The proposal is an attempt to reverse parts of a tax rewrite enacted by her Republican predecessor, Rick Snyder.
“No one likes to raise taxes,” she told lawmakers during her first budget address as governor. “I wish I didn’t have to come here today and put this budget before you because I know it’s hard. But the hard truth is we got to get to work. Every day we don’t we are jeopardizing our economic future, wasting our money and endangering our people.”
Her road-funding plan is expected to face resistance in the Republican-controlled Legislature, which passed fuel and vehicle registration tax hikes that took effect in 2017 but have been criticized as not generating nearly enough revenue. Critics said the tax hikes only slowed the decline of road conditions.
Whitmer said it would cost the average driver $23 a month, or $276 a year, but contended that motorists already are paying a “roads tax” for vehicle repairs caused by crumbling infrastructure. She proposed doubling the earned income tax credit for low-income residents, saving families at least $30 a month, and repealing the so-called retirement tax on pension and other income — saving 400,000 households $65 per month.
“Fixing the roads means we’re going to bring down the cost the average drivers spends per year on car repairs,” she said. “So the average person in our state will feel relief.”
Michigan now has the 9th highest combined local, state and federal gas taxes in the U.S., according to the American Petroleum Institute. Under Whitmer’s plan, it would have the highest taxes, easily surpassing states like Pennsylvania and California.
Whitmer also outlined a $507 million boost in K-12 spending , including extra funding to teach at-risk, special education, and career and technical students. Another proposal for the current fiscal year includes a $120 million infusion to improve drinking water infrastructure in the state where Flint’s crisis occurred and $60 million to install hydration stations in schools.