CHICAGO - Michigan Gov. Rick Snyder is touring the state urging voters to approve a May referendum to raise the state sales tax to generate new money for roads.
If Proposition One passes, the state would likely use the some of the first dollars to pay off bonds, Snyder told local reporters. He has also said that he'd "like to get rid" of long-term bonds to finance road projects.
New road funding has become Snyder's signature issue. He has pushed lawmakers for five years to raise taxes to create new money for the aging roads, saying it's crucial to Michigan's continued recovery.
Lawmakers balked until December, when they agreed to ask voters to raise the sales tax to 7% from 6% to create new money for roads.
The 10-bill package would generate up to $1.7 billion in new annual funding. About $1.2 billion of that would go to roads, with $100 million each for local governments and transit and $300 million for schools. The legislation would also hike fuel taxes by about three cents per gallon while removing the sales tax from fuel sales and increasing fees on vehicle registration and heavy trucks.
In a recent interview with MLive, Snyder said that new money would begin to be generated as soon as later this year if voters approve the plan. The state expects to tap some of the early dollars to pay off outstanding bonds, Snyder said.
"A lot of people don't realize that back in the early 2000s - 2003 or 2004 - the state borrowed over a billion dollars to do road repairs, which has actually sort of glossed over this issue, it helped hide it even more," he told the news service. He said the state currently pays $100 million in debt service for the road bonds.
When asked if he'd like to do additional bonding, he said he "wouldn't necessarily use the term bonding. For a year or two acceleration, you don't necessarily need to go out and sell a 10 or 20-year bond, and I'd like to get rid of those."
