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Michigan Senate changes bill to double fuel taxes, raising $1.5 billion a year for road fixes

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LANSING, Mich. - The Michigan Senate set the stage Wednesday for a potential vote on a plan to raise $1.5 billion more a year to fix deteriorating roads, primarily through a significant hike in fuel taxes paid by drivers.

The chamber revised a House-approved transportation funding plan but stopped short of voting until next week, to see if majority Republicans and minority Democrats can strike a bipartisan deal to boost what often is seen as a third rail in politics: gas taxes. Democrats, for instance, want assurances that Michigan's minimum wage will be increased.

Key elements of the Senate plan would:

— Calculate per-gallon taxes on fuel prices starting next January. The tax would start at 9.5 per cent, effectively increasing the state's 19-cents-a-gallon gasoline tax by 10 cents and doubling the 15-cent diesel tax assuming the statewide average wholesale price of gas is $3. The gas tax would rise to 11.5 per cent (around 34 cents) in 2016 if prices stay intact, 13.5 per cent (40 cents) in 2017 and 15.5 per cent (46 cents) in 2018.

The tax could rise or fall no more than 5 per cent in future years to account for any major year-to-year fluctuations in price. A penny increase in fuel taxes generates $50 million in additional revenue.

— No longer allow license plate fees, which are based on a percentage of a vehicle manufacturer's suggested retail price at the time it is first titled, to drop by 10 per cent each year for the first three annual plate renewals, generating $145 million more.

— Permanently dedicate a portion of the 6 per cent sales tax at the pump to road, bridges and public transit, setting aside $192 million more by taking it from the state's general fund.

"If we don't do something about the roads this year, we're shirking our responsibility," said Senate Majority Leader Randy Richardville, R-Monroe. "We were sent up here to lead and to take on tough issues. I think that we're ready and people are going to step up to the plate."

But there is no guarantee the Senate, where 26 of 38 members are Republicans, will support a major tax hike.

"The first option always considered in Lansing appears to be: 'Raise taxes,'" said Sen. Patrick Colbeck, R-Canton Township.

The less controversial House proposal would raise $450 million more a year for Michigan's $2.7 billion road and bridges budget and has been called a positive step forward after years of legislative inaction. But Republican Gov. Rick Snyder and others say between $1.3 billion and $2 billion is needed at a minimum to bring roads up to par or else the system will fall further into disrepair.

Richardville estimated the Senate bills would put up to $700 million more into roads in the first year and $1.5 billion above current levels by 2018.

Flat per-gallon fuel taxes — last raised in 1997 — have been faulted for declining state transportation revenue as people drive less and with more fuel-efficient vehicles.

Snyder says residents pay hundreds of dollars annually on unnecessary vehicle repairs due to shoddy roads. The business community contends that failing to address aging infrastructure is bad for economic development, and organized labour says additional road construction creates jobs.

Democrats also have concerns about the Senate legislation, noting that it does not include a House-passed bill that would raise fees and fines on overweight trucks. The panel's chairman, Sen. Roger Kahn, R-Saginaw Township, said he plans to have hearings on the rest of the House package starting next week.

"A low-income family, someone that's working minimum wage and has to drive 15, 20 miles to get to their job, it's going to be a lot harder for them to make ends meet now," said Robert McCann, spokesman for Senate Minority Leader Gretchen Whitmer, D-East Lansing. "We're trying to fight for more fairness in this bill and get something that gets the investment we need in our roads."

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Follow David Eggert at http://twitter.com/DavidEggert00 .

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