Michigan lawmakers included around $1.1 billion in new funding for road repairs in the state budget they passed early Friday morning.
The roads money comes from a mixture of budget cutting and other streams, many of which have faced their own criticism along the way to a final deal.
One part would increase the fuel tax by $0.51 next year, and raise it each year after using the inflation rate as a reference. To offset that, the state would stop collecting sales tax on gas.
Education groups spent months opposing that plan since that sales tax revenue would otherwise go to schools.
State Senator Darrin Camilleri (D-Trenton) chairs the Senate subcommittee that helped write the school budget. He said the roads bills would ensure that lost money gets made up for by giving schools dibs on other sales tax revenue.
“We do have the hold harmless language that we feel is strong and will hold. And no matter what, we know that schools will be receiving the type of money that we all want them to receive,” Camilleri said.
The deal would also find money by keeping state corporate taxes where they are, rather than lowering them alongside the federal government. Otherwise, changes in the federal One Big Beautiful Bill Act could have cost the state hundreds of millions of dollars in lost revenue, according to analysis from the non-partisan House Fiscal Agency.
State Senator Jonathan Lindsey (R-Coldwater) unsuccessfully tried to keep those tax cuts ahead of a floor vote on the policy early Friday morning.
“The legislation in front of us would prevent businesses in Michigan from taking full advantage of those tax cuts. I think that’s an unwise thing to do. Especially in an environment where Michigan cannot afford to become a less competitive state,” Lindsey said.
Another piece of the puzzle involves a new 24% wholesale tax on marijuana.
House Speaker Matt Hall (R-Richland Twp) called the overall roads package a compromise with Senate Majority Leader Winnie Brinks (D-Grand Rapids).
“We took her revenue. We took our cuts to waste, fraud and abuse. And we dedicate it all to roads,” Hall said.
The marijuana industry, however, strongly opposes the new tax hike. Advocates packed legislative chambers this week and rallied outside the Capitol and state Senate offices. A mobile billboard truck showed messages like, “Stay Strong Senators, No New Tax!”
Seth Miller runs a cannabis cultivation facility in southwest Michigan. He said that new tax would likely get passed on to consumers.
“What the state’s going to see from this is they’re going to see their overall growth sales go down and in turn, the tax revenue receipts go down as well,” Miller said Wednesday.
The marijuana tax bill was among the last ones of the roads plan to pass in the state Senate Friday morning after hours of speculation as to whether it had enough support in the chamber.
In the 2 a.m. hour, House legislative leadership on both sides of the aisle entered the Senate and started speaking with Senators. The bill passed a little after 3 a.m., with bipartisan support and opposition.
Brinks said the marijuana wholesale tax was the best path to raising revenue for roads.
“There was certainly a willingness to consider multiple ways to get enough revenue to cover the costs that we needed to cover for a responsible state budget. This just happened to be the one that could get the votes,” Brinks said.
Throughout the week, some holdouts shared concerns about how higher taxes could push consumers back to an illegal market and run growers out of business.
Camilleri ended up voting for the legislation, though he said it wasn’t “a perfect solution to the problem.” He said lawmakers were talking about other ways to come up with money for roads outside of that 24% tax before it would take effect on January 1.
“Can you tweak the marijuana component of this and find different sources of revenue? Perhaps. I know that nobody wants to put an end to the conversation tonight,” Camilleri said.
What that could look like down the road or how likely it is that something comes along, however, remains to be seen.
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