- Associated Press - Tuesday, August 18, 2015

LANSING, Mich. (AP) - Michigan lawmakers worked Tuesday toward an elusive $1.2 billion road-funding deal that is expected to include an unspecified gasoline tax hike, which supporters hope will clear a major hurdle in the House this week.

After a monthlong break, the Republican-controlled chamber was back in session for the first of three days. A still-emerging plan could feature $600 million a year in additional fuel and vehicles taxes and set aside $600 million in general funds for deteriorating roads and bridges - a compromise between legislation approved by the House and Senate in recent months. In May, voters defeated a sales tax increase that would have triggered more money for roads, education and municipalities.

“On both sides of the aisle, people just want to get it done,” said Rep. Jeff Farrington, R-Utica, who leads the House Roads and Economic Development Committee. “It’s what the public wants. They want us to go from current revenue first. But I don’t think the ballot proposal was a vote that said they don’t want any tax increase.”

If the House votes this week, the bills would go to the GOP-led Senate and then Republican Gov. Rick Snyder for his signature. The plan’s specifics remained in flux and were subject to change.

Legislative leaders left a lunch-hour meeting with Snyder and reported progress - but no agreement. In a procedural move, the House sent some transportation-funding bills to a House-Senate conference committee for potential revisions as early as Wednesday, and adjourned for the day.

Boosting the state’s 19-cents-a-gallon gas tax by a nickel and bringing the 15-cent diesel tax in line with the gas tax would generate roughly $300 million. Changing when and how registration fees drop after the purchase of a new car and increasing truck fees could pump hundreds of millions more a year into road upkeep.

Though Republicans in both chambers have previously endorsed plans that would divert at least $700 million in income tax revenue in the $9.9 billion general fund to roads, Democrats worry about the hit to other government spending and Snyder has expressed concern about leaving the budgetary impact for future legislators.

House Republicans could try to pass a proposal on their own, but Democratic votes are likely to be needed for any major tax hike.

“We’re not going to go along with any kind of Band-Aid approach that isn’t a permanent, sustainable fix to our roads,” House Minority Leader Tim Greimel said. “The amount of general fund dollars that House Republican leaders are talking about pairing with a (5-cent gas tax increase) is not a sustainable, permanent solution.”

Rep. Peter Pettalia, R-Presque Isle and chairman of the House Transportation and Infrastructure Committee, said lawmakers have become more open to the need for more tax and fee revenue after talking with constituents.

“Half could be done through efficiencies within the budget, and another half … will be some form of new revenue,” he said. “People that I have talked to said they’re willing to pay a little bit more as long as they know it goes to the problem. But just make it simple. We don’t need to tag in all sorts of other things on these bill proposals.”

Proposal 1 drew criticism because it was the product of a 2014 legislative deal that went beyond fixing roads and also would have affected school and local government funding and boosted a tax credit for low-wage earners.

A 5-cent gas tax increase would cost drivers about $34 more a year, according to Pettalia. A motorist who drives 15,000 miles annually and averages 22 miles per gallon now pays $130 a year in state gas taxes, not including sales taxes assessed at the pump.

After legislators left town in July, labor unions launched a ballot drive that would hike Michigan’s corporate income tax from 6 percent to 11 percent to put $900 million more into roads. Snyder, who pushed a business tax overhaul and cut in 2011, wants to head it off.

“That ballot proposal would be very destructive to growing the Michigan economy,” he told reporters.

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