CHICAGO — The Michigan Senate last week advanced a measure to divert a piece of the state’s fuel sales tax to finance transportation infrastructure projects, part of an effort to raise more money for the depleted roads fund.
Also last week, the Senate Transportation Committee approved a three-bill package that would create a new bond-issuing regional transit authority for the Detroit region.
The sales tax bill is part of a larger effort to revamp the state’s transportation infrastructure funding formula.
Gov. Rick Snyder has said Michigan needs to raise at least $1.4 billion of new money annually just to maintain its current transportation system.
The governor has made the funding issue one of his top priorities, urging lawmakers to consider a variety of proposals to drum up new money.
Currently, none of the state’s 6% sales tax on gasoline and diesel goes to transportation. Roughly 80% of the tax goes to the school aid fund and to local governments, with the remaining 20% going to the general fund.
SB 351 would divert that 20% to the state trunkline fund instead of the general fund.
The move would raise $135 million in new annual revenue, according to legislative fiscal analysts.
The money would be used as local matching funds for federal highway dollars, according to Sen. John Proos, R-St. Joseph, who sponsored the bill.
“Since I began public service in the Legislature, Michigan has struggled to identify enough state dollars to allow us to receive federal matching transportation funds,” Proos said in a statement. “My bill would help solve this problem.”
The retail fuel-sales tax is projected to raise a total of $937 million in fiscal 2013.
The bill is one of the least controversial proposals floating around the Legislature to raise money for the state’s roads.
Another proposal would replace the retail per-gallon gas tax — 19 cents per gallon for gasoline and 15 cents per gallon for diesel — with a wholesale tax.
Unlike the 6% sales tax, which drivers would still pay, the per-gallon tax is dedicated entirely to transportation projects.
The change would automatically raise the tax to 28.3 cents from 19.3 cents, and make Michigan the only state to apply a wholesale gasoline tax.
It’s estimated that the change would raise $541 million of new money every year.
Another proposal would increase the state’s sales tax to 7% and deposit the additional money into the transportation fund.
Legislators are also considering hiking vehicle registration fees to raise another $500 million.
The Senate passed Proos’ measure last week, and it will next be considered by the House Transportation Committee.
Separately, the Senate Transportation Committee last week passed a three-bill package that would create the Southeast Michigan Regional Transit Authority to create and coordinate public transit in the four-county area surrounding Detroit.
The authority could issue tax-exempt revenue bonds — payable solely from the system’s revenues — for construction and capital improvements.
It could also levy a special assessment or collect a vehicle registration fee if approved by voters.
The 10-member authority would build and oversee a high-speed regional bus system that runs to downtown Detroit and between Ann Arbor and the Detroit Metropolitan Airport.
The district is one of several state-sponsored initiatives to spark economic development in Detroit.
The bills would appropriate $250,000 to begin implementing the act.
A privately funded plan to create a light-rail system along Detroit’s Woodward Avenue continues, though federal officials recently expressed doubt about the project’s feasibility.
Detroit had planned to partner with private investors and issue federal grant-backed bonds for the light-rail project, but it has tabled its involvement.
