Higher fuel, vehicle taxes begin
LANSING (AP) — Michigan drivers will pay higher taxes at the pump and shell out more to renew their license plate.
The increased taxes, which Gov. Rick Snyder and lawmakers approved nearly 14 months ago to improve aging roads and bridges, took effect Sunday. It is the state’s first fuel tax hike in 20 years and the first major vehicle fee increase since 1983.
Here’s a look at where Michigan’s new gas tax ranks nationally and at other facets of the $1.2 billion transportation spending plan:
The gasoline tax of 19 cents a gallon will increase by 7.3 cents and the diesel tax of 15 cents a gallon will go up 11.3 cents, with automatic annual inflationary adjustments in 2022 and after. Vehicle registration fees will rise 20 percent. The measure also permanently shifts existing state funds toward road work starting in two years.
WHAT IT COSTS
How much you drive and your car’s fuel efficiency will determine how much more you pay in gas taxes. If you use 50 gallons of regular gas per month, that’s about $3.65 more in taxes, or $44 a year. Drivers currently pay $100 a year on average for license plate registrations. You will owe on average an extra $20 before your birthday, when tabs are renewed. Owners of hybrid or fully electric cars will be assessed additional fees.
Michigan will have the sixth-highest gas taxes in the country, up from 18th, according to an American Petroleum Institute analysis of rates in effect as of Nov. 1. Only Pennsylvania, Washington, Hawaii, New York and New Jersey will rank higher. You will pay about 57.3 cents a gallon, including the 18.4-cent federal gas tax. Michigan’s rank can fluctuate with prices because it is among a small number of states to also apply the sales tax to gas. Diesel taxes will be seventh-highest.
The transportation budget will wait four years until the full phase-in of $1.2 billion more in annual funding, the bare minimum Snyder has said is needed to keep roads up to par and from falling further into disrepair. In other words, motorists should not expect significantly better roads, partly because legislators already had shifted a record-high $400 million in general funds to transportation in the last budget. Such diversions are ending for a few years with the influx of new revenue, which means in the current budget, funding of state highways and bridges will actually decrease slightly. Municipalities, however, will have about $157 million, or 13 percent, more to spend initially.
A month ago, an infrastructure commission created by Snyder said “the reality is that the need for investment, particularly in roads and bridges, will not be fully addressed” by the 2015 road-funding plan. It said another $2.2 billion is needed per year to halt the continued deterioration of roads and warned that deferring construction until later makes projects more expensive. The Republican governor is highly unlikely to push a new proposal in the GOP-led Legislature after struggling to win approval of the tax and fee hikes.
Under the road-funding deal, you will qualify for an expanded and more generous property tax credit if your household income is below $60,000. The changes will not go into effect for another two years. In 2023, you might start seeing yearly reductions in Michigan’s 4.25 percent personal income tax if general fund revenues outplace inflation by a minimum amount.