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House Approves Road Funding Bill, Using Money Which Would Go To Schools, Local Governments

LANSING (WWJ/AP) - The Michigan House late Thursday approved a $1.2 billion plan to boost road funding without raising taxes by instead using money that would otherwise go to schools and local governments.

The Republican-controlled chamber passed the bills 56-53 and 58-51, almost entirely along party lines. That sends them back to the GOP-led Senate, which last month OK'd a plan that would more than double the 19-cents-a-gallon gasoline tax over four years, based on today's fuel prices.

Lawmakers have two weeks left in their lame-duck session to reach a deal to address deteriorating roads and bridges. Gov. Rick Snyder, a Republican, has backed the Senate proposal instead of the House plan.

"Simply put, this plan dedicates the taxes drivers pay at the pump to fixing their roads," House Speaker Jase Bolger, R-Marshall, said in a statement.

Michigan has some of the country's highest taxes at the pump but spends less on transportation than other states because the sales tax applied to fuel mostly goes to schools and local governments under the state constitution.

Under the House plan, the six percent sales tax at the pump would be gradually eliminated over six years. Over the same time, Michigan would switch from taxing fuel on a flat, per-gallon basis to taxing its wholesale price and increase an initial 7.5 wholesale tax rate to 13.5 percent.

Rep. Doug Geiss, D-Taylor, said revenue from collecting sales tax at the pump goes to schools, municipalities, the state's general fund and transportation.

"We're trying to solve one problem and creating four more," he said. "If we take more money from our schools and from our cities to solve this, to solve our road funding problem, we haven't really done anything."

Other Democrats decried the GOP plan as a "joke," a "charade" and an "embarrassment."

"This money will cut school aid fund for every single district in this state," said Rep. Sam Singh, D-East Lansing.

Bolger, who contends that economic growth would bolster overall tax revenue in the schools fund, said his plan was amended Thursday to ensure schools and local governments would be protected from budget cuts.

Over the six-year phase-out of the sales tax on gas and the increase in the per-gallon gas tax, K-12 districts and municipalities couldn't receive less funding than the previous year, or the plan would be repealed.

Forty percent of the new fuel tax revenue would go to state roads and 60 percent to local roads. That means some of the new money wouldn't help pay for public transit, as is typical.

"The bill robs Peter to pay Paul by diverting revenue that should be going to our already under-funded schools and cities," said Nathan Triplett of the liberal-leaning group Priorities Michigan.

The conservative group Americans for Prosperity said the House plan is "common sense."

"The road to economic prosperity is not paved with tax hikes," said Scott Hagerstrom, the organization's state director.

TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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