Response to Guest Editorial on Road Funding

Editor’s Note: Last issue guest contributor Greg Schmid wrote an editorial concerning legislation that State Senator Ken Horn has introduced that would repeal the road funding package the Michigan legislature passed last year, which provide $1.2 billion/year dedicated to repairing Michigan roads and replace it instead with a proposal that would increase the state sales tax to 7%.   What follows is Senator Horn’s response, which unfortunately we did not receive in time to include in our print edition last issue.

I was asked to provide a direct response to a guest editorial regarding a road funding alternative that was recently introduced in Lansing.  The irony is that no one would likely know that choices for road repair were even an option, except for Mr. Schmid's panicked concern.  His editorial, written without contacting me or my office, gives me the opportunity to clear up some misconceptions and concerns.

I’ve spent the past year speaking to people throughout my Senate District about roads. I’ve spent countless hours listening to residents in coffee shops, holding office hours, participating in mini-town halls, talking to business leaders in Michigan, speaking with my neighbors at Church and in local stores, and on radio stations such as WSGW and WHNN. It has been my practice since taking office to be accessible, which leaves me puzzled as to why Mr. Schmid wouldn’t attempt to contact me in any way. 

Yes, Proposal 1 of 2015 went down to a huge defeat at the hands of the people. It seemed doomed from the moment it left the Legislature in 2014 before I took office.  While I didn’t write the proposal, I supported it because at least it addressed our crumbling roads.  There were numerous concerns with the over-loaded and complicated proposal, and voters that I spoke to were well versed on the problems with the plan.  Indeed, some political activists jumped in front of the issue and patted themselves on the back for its defeat.  To me, that’s kind of like pointing out a big, steaming pile of stink and taking credit for you not stepping in it.

Mr. Schmid properly reminds readers that I battled a proposed increase in the sales tax when it was suggested by Governor Jennifer Granholm. I did indeed go head to head with Governor Granholm’s “Two-Penny” plan to raise the sales tax with a two-penny plan of my own. The Saginaw News cleverly called the battle, “Two-Penny Jenny” vs. “Two-Penny Kenny.” The editorial page included my plan to trim $860 million from the budget and is now framed and hangs in my Lansing office.

The Granholm plan was designed to raise money from the sales tax for the purpose of balancing the General Fund budget. It was not designed to fix roads, or anything else for that matter, but to pay for bloated government as we were losing some 500,000 Michigan residents because of the loss of 350,000 manufacturing jobs. Her plan preceded the Washington, D.C. stimulus money for Michigan, which I opposed as well.

Granholm’s plan was twice as much and far less specific than Proposal 1 of 2015, and that’s saying something.  Proposal 1 lost with a whopping 82% of the people saying no to the measure.

Our option is very simple and people like the folks at the Business Leaders of Michigan will tell you that this is the plan that Proposal 1 should have been. Here it is in a nutshell:

1. Repeal the new tax at the pump and higher registration fees scheduled to take effect January, 2017. 
2. Raise the state sales tax from 6% to 7%.
3. Repair roads and bridges and nothing else.
4. Separate it from current funding (no shell games).
5. Create parameters that prevents politicians from raiding it.
6. In ten years the state would return the 7% tax back to 6%.

One of the major problems with the current $1.2 billion solution is that it relies so heavily on future legislators keeping today’s promises.  While I supported the plan because it was the best solution we could arrive at with House and Senate agreement, $600 million is promised from future General Funds. I don’t believe for a moment that those dollars will be available as the need arises.

One of the conversations that was never fully vetted during negotiations was one regarding the most sensible way to fund roads in the long-term. The fickle nature of political promises doesn’t bode well for road repair. With less gas-powered cars and cars with better gas mileage hitting ours roads, it seems that taxing the gas pump will prove to be only be a temporary fix.

As I look across my economically diverse district, I also need to ask what type of road funding my constituents can best afford. Today, while gas prices are much lower than they have been in a while, I still have many people who pump $10 worth of gas at a time because that is all they can afford.

When you consider it, a sales tax is much more flexible to all payers. For instance, if a parent can afford a $30,000 car, but their college-bound son or daughter can only afford a $3,000 clunker, the tax is adjusted automatically to meet the budget of the buyer.

Activists for a “fair tax” understand this concept perfectly, and will argue that a consumption tax is the absolute fairest tax because there is no getting around it and everyone pays according to their ability. In Michigan, food and prescription medicines are exempt from the sales tax, making it all the less regressive for working families.

Here’s the bottom line; the proposal that we crafted over the summer simply provides a choice to the people of the state of Michigan.  If upcoming revenue estimating conferences aren’t what we expect, and the $600 million promised for roads isn’t there, we have an alternative on the table. 

If the opposite is true and our state revenues are healthy, the proposal will stay on the shelf of the committee in which it currently sits, unless it sees support from a grassroots movement.  In other words, you have choices available to you.

I truly appreciate the ability to share with you the truth of the work that is being done in Lansing.  You, as always, are welcome to contact my office to learn more about the work I do or any bill I propose.  If you would like more information about this plan, or any legislative initiative, you can contact me at senkhorn@senate.michgan.gov or toll-free at 855-347-8032.