What Does the Ballot Language Mean?
Here’s a breakdown of the language voters will see on May 5th – the italics are the actual ballot language with a short description of what that language would do.
The proposed constitutional amendment would:
Eliminate sales/use taxes on gasoline/diesel fuel for vehicles on public roads. This eliminates the sales/use tax on gas and diesel fuel.
Increase portion of use tax dedicated to School Aid Fund (SAF). By eliminating sales/use tax on gas, the School Aid Fund would lose quite a bit of revenue. This would increase the portion of use tax that is dedicated to SAF. This increase, with the increase in the sales tax outlined below, would replace the lost revenue and generate new revenues for education.
Expand use of SAF to community colleges and career/technical education, and prohibit use for 4-year colleges/universities. The School Aid Fund was created in 1994 to fund public education and has been used to fund early education (i.e. preschool), community colleges, career/technical education, and higher education. This would no longer allow SAF to fund general operations of 4-year institutions like Michigan State University, University of Michigan, and Wayne State University.
Give effect to laws including those that increase sales/use tax to 7% as authorized by constitutional amendment. This increase in sales tax will offset the cuts to the sales tax on fuel. Sales tax in Michigan would increase from 6% to 7% – a 1 cent per dollar increase – and continue to support schools, local municipalities, and the state general fund.
Give effect to laws including those that increase gasoline/diesel fuel tax and adjust annually for inflation, increase vehicle registration fees, and dedicate revenue for roads and other transportation purposes. These changes create new revenue to fix the roads. Right now, the state fuel taxes are 19 cents per gallon on gas and 15 cents per gallon on diesel (not including sales tax). If Proposal 1 passes, the fuel tax will be based on a formula that includes wholesale fuel prices and inflation. Initial fuel tax rates under this system would be 41.7 cents per gallon for gasoline, and 46.4 cents for diesel.
Also, Michiganders currently pay an annual vehicle registration fee that goes down for the first three years as car/truck values depreciate. Proposal 1 would eliminate this so registration fees would not go down, though it only applies to newer vehicles and exempts 2013 model years or older. There are also new surcharges for hybrid and electric vehicles.
Give effect to laws including those that expand competitive bidding and warranties for road projects. Proposal 1’s passage would trigger several laws into effect, all having to do with how roads are built. A couple of them include requiring the Michigan Department of Transportation to develop a performance-based rating system for road maintenance services, and requiring road agencies to publicly disclose whether they purchased a warranty for a particular road project.
Give effect to laws including those that increase earned income tax credit. The state’s Earned Income Tax Credit was cut from 20% to 6% in 2011. This change would restore the EITC back to the 20% level, ensuring that the entire package of tax shifts is a net gain for low-to-moderate income families.