By Carolyn Kramer, manager, Transportation Investment Advocacy Center

Michigan Gov. Rick Snyder (R) Nov. 10 signed into law an increase in the state’s motor fuel taxes and vehicle registration fees as part of a comprehensive $1.2 billion plan to fund the state’s transportation infrastructure. The new revenue, phased in over the next five years, will be distributed through the Michigan Transportation Fund for public transportation, highway construction, county road agencies, and cities and villages.

Beginning in 2017, the plan will:

  • Increase the state gasoline and diesel taxes to 26.3 cents-per-gallon (an increase of 11.3 cents-per-gallon for diesel and 7.3 cents-per-gallon for gasoline);
  • Apply the state motor fuel tax to alternative fuels (based on the motor fuel gallon equivalent);
  • Establish an alternative fuel dealer license and fee of $500;
  • Raise vehicle registration fees by approximately 20 percent; and
  • Create a new annual fee for electric-powered motor vehicles.

Starting in 2018 – and gradually increasing for three years until $600 million per year is transferred—the plan will also earmark a portion of income tax revenue for the Michigan Transportation Fund, to be distributed to state and local road agencies. Starting in January 2022, the plan will annually adjust the state motor fuel tax rates based off of changes in inflation as reported by the Consumer Price Index.

As part of the legislative compromise, the package of bills will also expand the Homestead Property Tax Credit and amend the state’s income tax.