It seems as if we are all paying a lot these days at the gas pump. But according to MDOT and the Governor we may not be paying enough to keep funding our roads for the future. To make sure that the money is there to repair, build and maintain, MDOT has proposed a change in the way gas is taxed here in Michigan. That proposal is the subject of this Fact Finder.
Kirk Steudle is the director of MDOT. He says MDOT's money problems are nothing new, but the result could be if something isn't done about it. Steudle told me "We have been saying for a number of years that we are running out of state dollars. That's the money we use to plow the snow, mow the grass, fix the signs." And because that state money is running low, MDOT says one solution is for you to pay more at the pump. Steudle say "One of the things that gets confused is everybody says well we just got all this recovery money how came they are talking about not having any money? Well I am talking about 2011."
So how did we get here? MDOT says with higher gas prices over the past couple of years, folks are driving less. Plus fewer drivers in Michigan with people leaving the state and more fuel efficient cars and hybrids means less gas is being bought. That means the state is collecting less in gas taxes. Steudle says "The gas tax is currently levied in Michigan is 19 cents per gallon and its 19 cents a gallon whether gas is $1.40 or $4.00 a gallon. Its 19 cents that's the money that goes to transportation to fix the roads or bridges."
But 19 cents a gallon isn't all that goes to fix roads and bridges. In fact right now the state uses the gas tax money to match federal money to do the work. If the state doesn't have the money, the fed's won't match it. Steudle says "the real issue is we don't have enough money to match the federal aid in 2011. We will leave almost 600 million dollars in Washington and that money will get spent by Georgia, Arizona, California, Tennessee you name your favorite state. They would love to have our federal share of gas tax."
So MDOT says we need to raise the money to make sure we get the federal match and one plan making the rounds in Lansing is getting a lot of attention if not support.
Steudle explains "the proposal that was talked about yesterday in the legislature hearing is to change that to a percentage of the wholesale and allow it as the price changes from $2.70 to 4 or 4 dollars to allow it to be a percentage."
So when gas costs more, you will pay more in taxes on it. Lets say gas prices continue to climb over time, MDOT says that could add up to 5 cents more in taxes next year compared to what you paying this year. If prices continue to rise for the next 5 years, the current 19 cent flat tax rate could swing as high, than 34 cents a gallon but not higher.
Steudle says their exists a window for the increase, a floor and ceiling in terms of how much the tax could increase if prices go up. In the first year, that ceiling is about 5 cents per gallon. For each year after that it could raise about 3 cents per year before being capped.
Right now, the proposal from MDOT is just that. It has not been introduced as a bill. According to MDOT, the Chairwoman of the House Committee is trying to rally both parties to co sponsor the bill before it hits the floor for debate.
I contacted Governor Granholm's office to see what her thoughts were about gas tax increase. Her office responded
"Governor Granholm supports the TF2 legislative reforms because Michigan needs much better roads. Michigan's roads are in terrible shape - they cost citizens money in car repairs and deter new businesses from choosing Michigan for job creation. Fixing our roads creates jobs now, can help attract jobs in the future and improves the roads for all who travel on them every day. So it's clear, even in challenging economic times we need to improve our roads." Liz Boyd, Press Secretary to the Governor
So what do you think? Are you willing to pay more at the pump in order to have more money go into road maintenance? Did your spending habits change when gas prices soared last summer? Is this a reasonable solution?
Let me know what you think. Please leave your comments below.
