Michigan Gov. Gretchen Whitmer met with farmers and agribusiness leaders on Wednesday in Zeeland to discuss her proposal on increasing the gas tax to fix the state's roads. It was the second of three scheduled meetings around the state with representatives from agriculture.
“Every one of us has a real stake in getting infrastructure right in Michigan,” Whitmer said. “We’re all paying for not getting it right. Farmers are, as they’re trying to get their goods to market when they hit potholes and have to repair their fleet. Or they’re sidelined and can’t get their goods to market on time. On top of it, last year we saw a bridge across from the largest blueberry grower in the state that collapsed. And it wasn’t MDOT or the state of Michigan that stepped up to fix it but the Department of Agriculture that did. It was a triage moment. We can’t afford to keep doing business like this.
“We’re all paying and jeopardizing our economy as we push off solving this problem.”
The governor’s proposal includes a 45-cent per gallon gas tax increase phased in 15-cent increments every six months (15 cents on Oct.1, 2019; 15 cents on April 1, 2020; and 15 cents on Oct. 1, 2020). Her proposal would eliminate the redirection of the state’s General Fund of $600 million that’s dedicated to transportation from the road package that passed in 2015.
Michigan Farm Bureau (MFB) policy supports user-based fees, such as a gas tax or registration fees when new revenue is needed for roads. However, such taxes must be consistent with neighboring states. Policy also supports allowing for indexing of the fuel tax rate and opposes reverting to property taxes to pay for roads.
Whitmer’s proposal is expected to generate roughly $2 billion a year in new road revenue. Current investments in roads will continue to go through the Public Act 51 Formula, which created the Michigan Transportation Fund. New revenue gained from the gas tax increase would go through the new Fixing Michigan Roads Fund which will be directed to the most highly traveled roads.
The funding formula would include:
- 47% for interstates and other freeways (both U.S. and M routes)
- 30% for principle arterial (most highly traveled non-freeway routes)
- 7% for major collectors (next highest level of traffic connecting local street network)
- 4% for local bridges
- 3% for multi-modal (e.g., transit, rail and other mobility projects across the state)
- 2% for local rural corridors (rural roads that do not fit into the above formula)
MFB policy states that all new revenue for roads and bridges shall go through the PA 51 formula. Furthermore, it opposes the distribution of funding based on road use or traffic volume.
Michael DeRuiter is a cherry producer in Oceana County and has concerns about the governor’s plan to funnel funds to highly traveled roads versus a more equitable distribution to rural roads.
“First, I really appreciate the governor coming and speaking to ag producers as I think it’s a great step in the right direction,” DeRuiter said. “Everybody in agriculture understands our roads are crumbling, and it’s costing us a lot of money. I’m not sure I agree with everything in her proposal, especially her plan to put a majority of dollars to heavy use roads. I’d rather see her use the PA 51 formula and getting the roads fixed for all of Michigan.”
According to Whitmer, drivers will pay an additional $270 per year at the pump due to the gas tax proposal. Allegan County Farm Bureau President Brad Lubbers was on hand to listen to the governor’s proposal and indicated consumers will eventually pick up the increased costs that farmers and businesses will pay for fuel.
“I see our roads as a drag on our economy,” Lubbers said. “The reality is, consumers are going to pay it. Everything gets moved by truck, so if the diesel price goes up, that will get passed on to the customer. It’s obvious to me the governor understands agriculture is an important industry, (as) evident in being in front of us here today.
“We need to keep reminding her just how important we are.”