Legislation in the House Would Help Remedy Transportation Funding Crisis

Due to rising gas prices and fuel conservation, Michigan’s gas tax revenues have experienced a dramatic $40 million drop, creating yet another pothole in available transportation funding.

Gas tax revenues account for a significant portion of funds that are used to fund Michigan’s transportation system, including roads, bridges and public transit.

“Many Michigan motorists may believe that higher fuel prices mean more gas tax revenues, but unfortunately that is not how it works – we get a flat 19 cents per gallon no matter what the price of gasoline is on any given day,” said Mike Nystrom, vice president of government and public relations, Michigan Infrastructure & Transportation Association (MITA). MITA is supporting House Bills 4575-4577, bi-partisan legislation recently proposed in the state House, which offer several options to remedy the transportation funding crisis.

“It’s simple: When the price of gas goes up, motorists tend to drive less and therefore buy less gas,” Nystrom said. “That’s why one of the options included in the proposed legislation is a higher gas tax, which has not been raised since 1997.”

An analysis by the Michigan House Fiscal Agency demonstrates that gas tax revenue fell consistently between 2003 and 2006. The state raised $896.8 million in gas taxes for 2006, which is $43.8 million less than in 2003.

“The bottom line is that rising gas prices means we have less money to fix our roads,” Nystrom said.