Article

Senator Ken Horn Seeks Ballot Proposal to Raise Sales Tax to 7%

Posted In:Politics, State, Taxes | From Issue 821 | By: | 14th January, 2016 | 0

Senator Ken Horn Seeks Ballot Proposal to Raise Sales Tax to 7%

The voters have spoken. No means no, right? Apparently Saginaw County Senator Ken Horn does not understand this.  Horn has just sponsored another Proposition 1 style ballot question (Senate Joint Resolution M) to increase the state sales tax from 6% to 7%.

Never mind that the taxpayers had to bear the $10 million cost of holding a special election last May. Never mind that the voters said NO by a 4 to 1 margin, the largest Ballot Question defeat in Michigan history.

Disappointed with voters last May, when 80% voted to reject a 17% state sales tax increase, the largest proposed tax hike in Michigan history, Horn was a major booster for the doomed “yes vote” campaign, which was funded by the Michigan Infrastructure and Transportation Association, representing road builders who stand to profit handsomely from lucrative government road building contracts.

The government set the vote up to be held in May, in order to avoid high voter turnout and stack the deck for a yes vote. The “yes vote” campaign spent about $10 million on TV ads and jumbo postcards in an attempt to guilt Michigan voters into approving the tax hike, depicting our roads and bridges as unsafe for travel.  They showed photographs of the worst examples of failing bridges and potholes, and pretended that these conditions were typical for our roads. They might have gotten away with it too, were it not for the efforts of local self-made businessman Paul Mitchell, who spent half a million dollars of his own savings to blow the lid off the distorted government claims.

Since the election, Mitchell has been roundly credited with quickly educating the public, most of whom were unaware that the surprise tax hike election was coming up. Once the voters woke up to the government plot, they overwhelmingly rejected the idea.

After Proposal 1 was roundly defeated last spring the legislature went to work on crafting a compromise solution to Michigan’s road and bridge problems. Few question the need to develop a funding strategy to keep Michigan roads safe. We have come to take for granted a safe world class road system, but over the years we have forgotten how to pay for it. Without dedicated funding, road repair and maintenance needs would suffer from the clamor for other important priorities.

Rather than imposing a crushing $2 billion/year additional tax burden on Michigan citizens as Proposal 1 would have done, Republicans in the state legislature passed laws to provide $1.2 billion/year dedicated for our roads. The new laws do not raise the sales tax; the new road plan combines $600 million of re-prioritized budgeting of current state funds with $600 billion in new revenue to guarantee that Michigan’s roads get the attention they need. Under the new laws, Michigan motorists would typically pay about $20 more for their vehicle registration fees and spend about $1.17 more for a 15-gallon fill-up in increased fees and fuel taxes.

Problem solved, right? It’s not a perfect solution but it is a reasonable and sustainable plan for the future, and it does not increase the regressive sales tax. Even fiscal conservative representative Tim Kelly voted in favor of the plan, which speaks volumes about how reasonable the approach is. It is inexplicable that Sen. Horn would prefer to repeal the road funding compromise that took real courage to pass, and go for a sales tax increase instead.  Horn is a Republican, and when he first joined the legislature he recognized that the tax burden was unsustainable, and pushed for a 2% across the board cut in state spending. Democrats demonized him and labeled him “Two-penny Kenny,” claiming he was naïve for having such a simplistic solution, saying that parts of the stage budget are not discretionary.

Unfortunately, it appears that years of experience did not teach Sen. Horn to stand up for his original principled opposition to the high cost of government; so now, instead of fighting against tax hikes, Horn is fighting for higher taxes and even advocates the repeal of term limits on legislators like himself. (Horn forgets that term limits made his legislative career possible in the first place).

Citizens should remind Sen. Horn that they opposed a sales tax increase last May and will oppose it again if he manages to get his way. Horn should reconsider his new 7% sales tax proposal and withdraw it before he earns himself a new label. If he fails to change his ways, and succeeds in getting a sales tax increase that would cost taxpayers $1.5 billion dollars each year forever, Democrats and Republicans alike will soon be calling him “Another-penny Kenny,” and just in time for his bid for reelection in 2018.

 

Response to Guest Editorial on Road Funding

Guest Commentary by Senator Ken Horn

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.

 

 

 

 

 

Comments

Please Login to Comment

Current Issue