January 18, 2017
9:01 am

New MI Gas Tax Ready to Take Effect

While the new gas tax and higher automobile registration fees in Michigan may not be the welcome to 2017 you were hoping for, we may finally start to make some progress on the condition of Michigan roads and bridges as a result of those higher costs. 

With the Michigan transportation package taking effect this weekend, the Berrien County Road Commission and Michigan’s 82 other county road commissions and road departments are all cautiously optimistic that they will begin to make modest progress improving road conditions across the state. With fewer than 18-percent of Michigan’s federal-aid eligible roads in good condition – and the local road system in even worse shape – restoring the roads is a tall order.

Denise Donohue is Director of the County Road Association of Michigan, whose members are responsible for 76-percent of Michigan's road miles. She says, “As state leaders said when the bills were signed, this is a good first step for Michigan roads.” She adds, "By the time the new revenue is fully implemented in 2021, we will have half the funds that experts say are needed to fix the roads.”
 
Knowing that increased state support for roads was coming, and with passage of the federal transportation bill achieved in late 2015, Michigan’s county road agencies have been able to develop longer-horizon plans for restoring the infrastructure.  The availability of local match dollars is another dynamic factor involved in making such plans.
 
The new road revenues taking effect this weekend, on Sunday, January 1, 2017, are the first increase in state road funding in 20 years and include the following:
 
  • A 7.3 cent increase in state gas tax to 26.3 cents, all of which is Constitutionally-dedicated to the Michigan Transportation Fund (MTF)   (Note:  Michigan also levies sales tax at the pump, which most states do not; these taxes do not go into the MTF.)
  • A-20 percent increase in registration fees for passenger vehicles and most commercial trucks, all of which is Constitutionally-dedicated to the MTF
  • An increase in tax on diesel fuel, bringing it equal with the state gas tax on fuel at 26.3 cents, and Constitutionally-dedicated to the MTF, and
  • New taxes on alternative fuels and registration surcharges on electric vehicles.
 
The three main categories of fee and tax increases taking effect with the New Year are the gas tax increase which is expected to generate $236-million in new funds in 2017...vehicle registration fee increases expected to generate $155-million in new funds in 2017...and the diesel parity increase, which is expected to generate $69-million in 2017. Altogether, an estimated $460-million of new monies will be directed to Michigan roads and bridges by the end of calendar 2017.
 
County road agencies are working with their townships and communities to prioritize the limited funds for needed work on roads, bridges and right-of-way issues such as drainage.  Some new work will occur this summer, but CRA cautions that it will be many years before county road agencies can work on all of the roads in a county.
 
Costs to resurface a mile of road range from $110,000-$200,000 per mile, and reconstruction costs are likely to be higher.  Michigan has 120,000 miles of roads – 90,000 miles under county road agency control – and 5,700 local bridges.  It is the nation’s fourth-largest local road network.
 
The 83 members of the County Road Association represent the unified credible and effective voice for a safe and efficient local road system in Michigan, collectively managing more than 73-percent of all roads in the state—more than 90,000 miles and 5,700 bridges—the fourth-largest county road system in the nation.
Filed Under :
Location : Michigan
People : Denise Donohue
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