By Maria Braganini
The Mason Times
Intermodal Policy Section Manager for the Michigan Department of Transportation Rob Balmes provided a brief overview of Proposal 1 at the March 16 City Council Meeting detailing main changes taxpayers will witness if the Proposal is passed.
“Proposal 1,” Balmes said, “will increase sales tax from 6 to 7 percent, while exempting fuel purchases, if approved by a vote to amend the Michigan Constitution May 5.
Sent to ballot by the House and the Senate, Proposal 1 would trigger a series of other laws designed to maximize new investments on road funding and minimize growing tax burdens for low-income residents, Balmes said.
According to Balmes, Proposal 1 would generate about $1.25 billion a year for state and local road agencies by 2018, and another $200 million a year to schools, $111 million for cities, $116 million for mass transit and $173 million for the state general fund.
Balmes outlined the 10 pieces of legislation Proposal 1 offers Michigan people if passed on May 5.
“The sale of regular and diesel fuels would be exempt from the state sales tax and use tax, which would increase to 7 percent from 6 percent,” Balmes said.
Estimated by The House Fiscal Agency, removing the sales tax from fuel sales would result in an estimated revenue loss of $653.6 million in the 2016 fiscal year.
In addition, Balmes said, new cars would lose their registration fee discounts, large commercial trucks would have their registration fees hiked and additional payments would be placed on electric and hybrid vehicles.
According to Balmes, the increased fees on heavy trucks would raise $39.8 million and the extra charges on electric and hybrid vehicles would raise an extra $636,900 in 2018.
Funds raised by the proposed increases in the first two years after Proposal 1, would be applied to pay off significant road debt, not to fix the roads, Balmes said.
“In the second year of Proposal 1,” Balmes said, “$4 million will be paid to rid Michigan road debt, following year three which will have paid the full amount of capital, outlining years for more projects.”
Mayor Pro Team Marlon Brown said that all proposed changes are tied to the outcome of the referendum.