Jackson County Chamber of Commerce 517.782.8221 141 S. Jackson St. Jackson, MI 49201
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CHAMBER TAKES NEUTRAL POSITION ON STATEWIDE...

For years, the Jackson County Chamber has been a strong advocate for increased transportation investment.  It is estimated that the minimum needed to improve the condition of roads in Michigan is $1.2 billion per year. 

In the final days of the 2014 legislative session, legislators and the Governor placed a Constitutional amendment on the May 5, 2015 ballot for voters to approve or reject.  If approved by voters, the amendment would also trigger enactment of a series of other statutory tax and spending changes.  The following information is provided by a Michigan Chamber commissioned report by Anderson Economic Group and is intended as an overview of a very complicated set of constitutional and statutory changes.

Key points of the proposal:

• Increase Michigan’s sales & use tax rates from 6% to 7% 

• Exempt fuel purchased for motor vehicles used on public roads or highways in Michigan from the 6% retail sales tax.  As currently written, any fuel purchased for snowmobiles, boats, tractors and other “vehicles” that is not used on public roads in Michigan is subject to the retail sales tax.

• Increase revenue dedicated to the school aid fund by $300 million annually, and revenue dedicated to local governments by $100 million annually

• Increase revenue dedicated to public transit spending by $130 million annually, and

• Prohibit school aid funds from being used for higher education.

Related Statutory Changes:

• Change diesel and gas taxes from a retail cents-per-gallon tax (15/19 cents per gallon respectively) to a wholesale percentage-of-the-price tax. The new rate would initially be approximately 41.7 cents per gallon for both fuels with a floor and ceiling rate defined in statue. 

• Increase commercial vehicle registration fees based on weight, and change the passenger vehicle registration tax from a declining schedule based on the original list price to an annual fee that remains the same for the life of the vehicle

• Revise competitive bidding and warranties for road work

• Pay off Michigan Department of Transportation debt from previous infrastructure bonds

• Increase the state Earned Income Tax Credit targeted at low-income families by $260 million, and

• Increase at-risk school funding by $40 million.

 

Chamber members were asked in an email survey is they thought the Chamber should support, oppose or take a neutral position on this ballot initiative.  Over 20% of the members responded and results were split with 40% supporting, 40% opposing and 20% neutral.

After studying all the pros and cons of the ballot and subsequent bills and listening to our members, your Jackson County Chamber has decided to remain neutral on the proposal.  

We highly encourage you to study the information and exercise your right to vote on May 5th.

Regardless of what happens, the Chamber will continue to work with local and state leaders to address the problem of our crumbling roads.

 

Pros

According to the non-partisan House Fiscal Agency, voter approval of the proposed Constitutional Amendment would increase state revenue by approximately $1.7 billion.  Increased road funding would allow the state to improve certain roads, thereby allowing commerce to continue unimpeded by our current horrendous road conditions.

Cons

• Approximately $800 million of the increased revenue will be spent on past construction debt in the first year and approximately $400 million in the second year, meaning there won’t be significant increases in road construction until year three;
• This creates compliance burdens and enforcement risk for users of fuel for boating, industrial and other purposes other than driving vehicles on public roads
• There will be widely varying tax burdens on fuel users, as certain users will pay the new, higher motor fuel tax but not benefit from the motor fuel sales tax exemption
• There might be a federal income tax increase among approximately 1.2 million Michigan households that itemize deductions for state and local property taxes
• There could be infringement of federal nondiscrimination laws regarding state-supported scholarships, should the state use the newly-created authorization to fund “scholarships only to “public community colleges
• Increase in business tax burden:
            o Michigan businesses paid $2.7 billion in sales tax in 2012.  The proposal would likely raise this figure by about $400 million.  This includes $500 million increase due to the higher sales tax rate and $100 million less due to the exemption of motor fuels from sales taxation.
            o Michigan businesses paid over $122 million in motor fuel excise taxes in 2012.  That is estimated to rise by over $200 million with the new proposal.
            o Michigan businesses are also expected to pay $50 million in additional registration taxes.

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