Plan is complex, but it limits possible spikes in levy on wholesale gasoline price

At the center of Gov. Rick Snyder's plan for Michigan roads is a replacement of the state's gasoline tax. Instead, he proposes a percentage tax on the wholesale price of gasoline that would boost state revenue when inflation drives up fuel prices. It's more complex than a hike in the existing tax — which we'd prefer. But it certainly is a better answer to the glaring need for more road repair money than the inaction Michigan motorists have gotten from Lansing.

More than a month ago, a House Republican-led study reiterated what state Transportation Department and industry officials have said over and over again: The state is on the verge of falling woefully short of funding needed to maintain the infrastructure to support commerce and create jobs. The study said Michigan needs $1.4 billion in additional revenue now and through 2015 to keep its roads in good or fair condition. The added need rises to $2.6 billion by 2023.

The new fuel taxes Snyder proposes would raise only a portion of that. He tossed out the idea — without necessarily advocating for it — that a $120-per-vehicle-per-year boost in motorists' registration fees could be used to raise nearly $1 billion in additional road money.

In the transportation revenue road map he laid out Wednesday, Snyder proposed a modified version of a percentage fuel tax first recommended by a special task force during his predecessor's administration: the state would pick the percentage — say 6 or 7 percent — to be paid by fuel wholesalers and presumably included in the pump prices customers paid.

But Snyder would impose an upper and lower limit on the amount per gallon collected from the new tax.
This additional feature would limit the volatility that concerned us with the similar plan put forth by ex-Gov. Jennifer Granholm. The state could, for example, set as a lower limit the amount raised by our current per-gallon tax of 19 cents, or perhaps a few pennies higher, thereby assuring it never collected less for roads than it does now. At the same time, setting an upper limit would give drivers an assurance that the state's fuel tax wouldn't exorbitantly add to the cost of gasoline during times of rising oil prices.

We still believe a straightforward boost of several pennies on the existing taxes on gasoline would be easier for taxpayers to understand. But it must be acknowledged that the flat tax rates don't automatically let revenues keep pace with inflation. In fact, state income from the current fuel taxes is declining as Michiganians drive less and buy vehicles that get better gas mileage.

The tepid response lawmakers are giving Snyder's proposals is a major concern. At this point, majority Republicans publicly oppose any fuel tax increase. Some leaders suggest nibbling around the edges with vague "efficiencies," and/or eliminating waste, which often is Lansing code for doing little.

There's no question about the need for more road repair revenue. It's incumbent on elected officials to provide it — through the governor's plan or a reasonable alternative. And it's up to the Snyder administration to persuade them to do so.

From The Detroit News: http://detnews.com/article/20111030/OPINION01/110300311/Editorial--Gas-tax-change-adds-needed-funds#ixzz1cN9ZknFH