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Lots to think about. Thanks to everyone who has contributed to this discussion.
I’m still leaning in favor of it.
It seems to me that the arguments against it boil down to four concerns:
(1) We don’t want to pay more taxes
(2) We don’t trust the government to use the money correctly
(3) This proposal is too complicated and involves too many other issues
(4) This proposal won’t raise enough money to get the job done
Concerning (1), in the past I’ve asked people more than once what programs THEY use that THEY would be willing to cut, and I’ve never gotten an answer. It’s always somebody else’s problem. Cuts won’t fund road repair. Revenues will have to be raised somehow.
Concerning (2), well, we’re not going to have a revolution or even a constitutional convention, so we’ll have to work with the government we have. I think some of you have made a strong case for more citizen oversight of MDOT. I don’t know anything about the inner workings of MDOT, but I would guess that this agency has to respond to pressure from elected officials who in turn are responding to pressure from various interests. If Prop 1 passes, perhaps the legislature could add further strings to the funding after the fact to insure that it funds repair and not new roads, if citizens organize and lobby for that. Past (or present) waste is not an argument for doing nothing, it’s an argument for more citizen involvement.
Concerning (3), again, this is not an argument for doing nothing. Some of the horse-trading and sausage-grinding that usually goes on in the legislative process has made its way into the ballot proposal. So vote out the legislators who didn’t do their jobs and passed the buck to the electorate, but don’t go another year without doing something about the roads.
(4) is the one that really worries me. If Prop 1 passes, and it’s not enough, then I’m afraid that voters might be even more resistant to a further revenue increase that might be necessary to finish the job. I also wonder if voting down Prop 1 would give our cowardly legislators the political cover they crave in order to pass legislation that will address the problem (“voters voted down prop 1, so now we have to pass this small across-the-board tax increase to fund the roads, which is fair to everyone but also pisses everyone off, boo hoo”). I would suspect that was their strategy all along, but I don’t think our legislators are that clever. I hope that as the economy improves, revenues will rise sufficiently from existing taxes and fees to cover what Prop 1 doesn’t fund. But if they don't, I’d still rather fix some roads than no roads.
Going back to (3) for a moment, I have to address the “let them eat cake” attitude that some people seem to have toward the working poor. These folks already took a hit to balance the state budget when they lost the state EITC. It is well documented that wages have not kept up with inflation, and the recent raise in the minimum wage does little to rectify that. It’s not fair demand further sacrifice from them in the form of sales tax and gas tax increases, which hurt the working poor proportionately harder than wealthier groups. That’s why it’s important to offset the sales and gas tax increases with restoration of the EITC. Anyone who thinks the EITC is unnecessary should try supporting a family on $10.00/hr for a while.
I say vote in Prop 1 and vote out the bums who foisted this on us instead of doing their job.
Proposal 1 will give Michigan the second highest state-level sales tax in the country. Only California, with a 7.5% sales tax, will be higher. (Five states have no sales tax whatsoever.) A sales tax is very regressive...and it wasn't that long ago that Michigan's sales tax rate was 4%.
Proposal 1 touts the 1-cent sales tax increase (a 17% increase), yet none of that money is to go towards roads. (This fact is never mentioned in any ads.)
Proposal 1 will raise the fuel tax to 41.7 cents/gallon--up from 15 cents/gallon on diesel and 19 cents/gallon on gasoline. This will more than double the tax on gasoline (up 219%, +22.7 cents/gal) and nearly triple the tax on diesel (up 278%, +26.7 cents/gal). This, too, is never mentioned in their ads. Of the 50 states, the median gas tax is 22 cents per gallon.
Michigan's gas tax will be the second highest in the country, second only to Pennsylvania (whose residents still complain about their bad roads). Of course, with the automatic yearly increases, it may not take long to become #1!
Michigan still has the highest weight limits in the nation for trucks. Why is that never mentioned anymore?
The federal gasoline tax is an additional 18.4 cents per gallon--which will likely go up, too. Coupled with the federal tax, Michigan residents will be paying a minimum of 60.1 cents per gallon in fuel taxes on gasoline, 66.1 cents/gallon on diesel.
If approved, Proposal 1 will automatically increase the gas tax every year hereafter--and we will have no say about it. The complex formula assures that the tax will always go up, even 5 cents a gallon/year, and it will never go down, even if the economy tanks or if gas prices go down.
Proposal 1 will also increase license registration fees, which presently cost drivers over $900 million/year. Projections are that the license fees will cost another $150 million.
Proposal 1 funds a number of issues unrelated to roads, yielding over $2 Billion in tax increases, enshrined into our Constitution (some estimates are over $2.6 Billion). At least $800+ million will be used for non-road issues including, among others, increased funding for Earned Income Tax Credits and general revenue sharing to local governments. Public colleges and universities would be Constitutionally prohibited from receiving needed funding from the School Aid Fund.
None of the money for roads is restricted to road maintenance! In fact, very little is expected to go towards road maintenance until 2017 or 2018.
High sales taxes and high gas taxes--on top of our high property taxes--will not be good for Michigan's economy...or for Michigan residents. In many respects, Michigan is already at a competitive disadvantage. Proposal 1 will make it worse.
My analysis of a House Fiscal Agency report for MDOT funding for Fiscal Year 2013-2014 indicates that, merely based upon present consumption rates, the added fuel taxes would immediately yield an increase of $1.2 Billion/year--not even taking into account the other tax increases embodied in Proposal 1. What has not been mentioned is that about a third of the MDOT budget is derived from federal matching funds. The federal matching funds received in FY 2013-14 were 50% of the state gas tax revenues. In some years, the federal matching funds have been significantly more. If state revenues go up, and especially if the federal gas tax goes up, as many suspect, the state's proceeds from federal funding would likely go up accordingly.
If federal funding is projected at 50% of the gas tax revenues, at initial Proposal 1 levels, that would yield an MDOT budget of over $5.5 BILLION--approximately $2 BILLION above their FY 2013-14 allocations of $3.6 BILLION. (And it could be much higher depending on federal grants.) Again, I am not so naive as to believe that those funding levels will be used exclusively to fund maintenance and repair activities. Giving them more money, without any restriction as to the use of those dollars, will never get them to change their wasteful and misguided policies. In fact, limiting the amount they can spend is probably the ONLY way that we can get MDOT to reassess their priorities.
So...I am not so concerned that we won't have enough money generated by Proposal 1--I am more concerned that we will be giving MDOT too much money! I can practically guarantee that wasteful practices will continue, and they will almost immediately begin a campaign to lessen expectations, to say that Proposal 1 won't meet our needs...because quietly they know that Proposal 1 is designed to enrich their coffers, and to fund some of their Billion Dollar boondoggle projects that they have planned. It's not really just for road maintenance. Pot holes are just the easy sell. (Saying that they want Proposal 1 so that they can spend a BILLION DOLLARS widening I-94 in Detroit would be a much harder sell.)
A more modest tax increase, specifically earmarked to road maintenance, would be better financially for Michigan residents...and it would also provide more immediate funding, at higher levels, to fund road maintenance. Proposal 1 just gives us more of the same; but with ever increasing, permanent taxes which will never go down.
Last edited by jackmichigan; 04-30-2015 at 03:58 PM..
^Thank you for the detailed information you have supplied. One small but important correction to the above: *4-year* colleges and universities would be cut out of the School Aid Fund, but community colleges would not.
The BallotPedia site has a useful page about Prop. 1: Link
It has the exact ballot wording, the full text of the constitutional changes, summaries of the ten (!) other bills that are linked to passage of this proposal, and other useful information.
[quote=tuebor;39430470
It seems to me that the arguments against it boil down to four concerns:
(1) We don’t want to pay more taxes
(2) We don’t trust the government to use the money correctly
(3) This proposal is too complicated and involves too many other issues
(4) This proposal won’t raise enough money to get the job done
Concerning (1), in the past I’ve asked people more than once what programs THEY use that THEY would be willing to cut, and I’ve never gotten an answer. It’s always somebody else’s problem. Cuts won’t fund road repair. Revenues will have to be raised somehow.
[/quote]
Concerning #1:
We did pay more taxes when Engler raised the state gas tax and the potholes never got filled.
Michigan gets less than $1 back for every dollar contributed to the federal gas tax. Is that our fault?
The issues of overweight trucks and poor road construction methods have not been addressed, yet we are asked to keep throwing money at this.
Going back to (3) for a moment, I have to address the “let them eat cake” attitude that some people seem to have toward the working poor. These folks already took a hit to balance the state budget when they lost the state EITC. It is well documented that wages have not kept up with inflation, and the recent raise in the minimum wage does little to rectify that. It’s not fair demand further sacrifice from them in the form of sales tax and gas tax increases, which hurt the working poor proportionately harder than wealthier groups. That’s why it’s important to offset the sales and gas tax increases with restoration of the EITC. Anyone who thinks the EITC is unnecessary should try supporting a family on $10.00/hr for a while.
I say vote in Prop 1 and vote out the bums who foisted this on us instead of doing their job.
It doesn't just restore the amount the average receipient loses, $94 annually, but adds over $300 to them. Since the State EITC is simply a factor of the Federal EITC, they already get an average $2,200 EITC from the Feds which, combined with the State amount, is the equivalent of a $3,000 raise in wages (because this is an untaxed benefit).
We did pay more taxes when Engler raised the state gas tax and the potholes never got filled.
Michigan gets less than $1 back for every dollar contributed to the federal gas tax. Is that our fault?
The issues of overweight trucks and poor road construction methods have not been addressed, yet we are asked to keep throwing money at this.
Some of the potholes got filled. I'm guessing MDOT would say that the tax increase wasn't enough to fill all of them in that time. Would it have been enough if they had had a moratorium on all new projects? Maybe, but maybe some of those projects were needed and/or were already in the pipeline when the crash of 2008 came along and messed up the state's finances.
I've read that Michigan is indeed a "donor state" when it comes to federal financing, and not just in regard to highway funds but overall. I don't know what to do about that, but I don't think we should put off dealing with the roads until we can figure out how to get more of our money back from Washington.
If trucks are exceeding weight limits, then we should do something about that, but if we solved that problem tomorrow, we would still have a lot of damaged roads and bridges to fix. Poor construction methods are addressed in Prop 1:
"Fourth, Proposal 1 would allow municipalities to finance road projects through competitive bidding, require performance-based evaluations for state projects, and require warranties for road construction projects costing more than $1 million."
(from the summary on BallotPedia page I linked above)
It doesn't just restore the amount the average receipient loses, $94 annually, but adds over $300 to them. Since the State EITC is simply a factor of the Federal EITC, they already get an average $2,200 EITC from the Feds which, combined with the State amount, is the equivalent of a $3,000 raise in wages (because this is an untaxed benefit).
According to BallotPedia (see link in my earlier post), "Households eligible for the Earned Income Tax Credit would save between $24 and $69 in taxes per year." They refer to a Detroit News article for their figures, which I haven't read yet, but it is linked to their page.
I think trying to describe it in terms of an equivalent wage increase is a way of making it seem more than it really is and only muddies the waters.
According to BallotPedia (see link in my earlier post), "Households eligible for the Earned Income Tax Credit would save between $24 and $69 in taxes per year." They refer to a Detroit News article for their figures, which I haven't read yet, but it is linked to their page.
I think trying to describe it in terms of an equivalent wage increase is a way of making it seem more than it really is and only muddies the waters.
Michigan League for Public Policy, a supporter of the proposal, is the author of the $94 average increase on EITC recipients from the proposal. Since the EITC would go up on the average recipient $308, I see net tax benefit of $214, not $24-$69. Okay, ignoring wages/taxes, the average EITC recipient receives an actual $2,368.
Going back to (3) for a moment, I have to address the “let them eat cake” attitude that some people seem to have toward the working poor. These folks already took a hit to balance the state budget when they lost the state EITC. It is well documented that wages have not kept up with inflation.
Wages have not kept up with inflation due to ever-increasing taxes. You realize your take home pay is less every time taxes are increased? So, now we want to raise taxes again.
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