- Associated Press - Tuesday, October 13, 2015

LANSING, Mich. (AP) - Months of talks over an elusive $1.2 billion plan to improve Michigan roads broke down Tuesday, with Gov. Rick Snyder and legislative leaders declaring an impasse over linking higher fuel taxes, vehicle registration fees and fund shifts to some form of income tax relief.

Majority Republicans support reducing the state’s 4.25 percent personal income tax as part of a road-funding proposal. Minority Democrats favor targeted tax breaks such as expanding tax credits for homeowners and low-wage earners.

The GOP governor declined to specify why a deal was out of reach but said “it’s fair to say people have different perspectives on what tax relief might look like.” He had previously said he wanted to ensure a tax cut would not jeopardize Michigan’s budget, and Democrats echoed those concerns Tuesday.

Snyder has long pushed for higher gasoline taxes and license plate fees to boost stagnant state transportation spending. He told reporters after a private meeting with House and Senate leaders that he would schedule no further talks “unless I see progress.”

“I tried to remind people when you do compromise, hopefully there’s a lot of things you like. But obviously when you have the differences in political perspectives, you’re going to have some parts of the package you probably don’t like very much,” he said. “Part of it’s saying, this is a win for all of us so let’s move forward.”

In May, voters soundly defeated a sales tax increase - backed by Snyder and proposed by the previous Republican-led Legislature - that would have triggered more money for roads, education and municipalities.

House Republicans passed a proposal the next month that would largely cut or shift spending while boosting the state’s 15-cents-a-gallon diesel tax to equal the 19-cent gasoline tax and gradually increasing both with inflation. In July, Senate Republicans voted to increase the gas tax and diesel tax to 34 cents and dedicate existing tax revenue to roads while also triggering income tax cuts if revenues rise by more than inflation.

Snyder and legislative leaders recently discussed an unspecified $800 million increase in fuel taxes and vehicle fees and a shift of $400 million from other spending.

“A lot of progress has been made, but there’s still some outstanding, very thorny issues that are difficult to resolve,” said Democratic House Minority Leader Tim Greimel, who also refused to elaborate on closed-door discussions. In a later interview with The Associated Press, he raised concerns about pairing a permanent $400 million annual transfer from the general fund to roads with an income tax cut that he said would “disproportionately benefit the wealthy and well-connected.”

GOP Senate Majority Leader Arlan Meekhof said in a statement that “taxpayers deserve long-term tax relief, especially when we are seeking additional resources to fund our roads.”

Some rank-and-file Democrats, whose votes likely would be needed for fuel tax increases, have wanted assurances that a petition drive to rescind the state’s 50-year-old prevailing wage law will not be approved by the Legislature and instead go to voters in 2016. But that was not a sticking point in leadership-level talks.

Though all sides committed to continue working toward an agreement, the stalled negotiations were a discouraging sign.

“At what point do you determine that something is not going to come together?” asked Republican House Speaker Kevin Cotter.

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

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