As the end of the legislative year draws near, motorists still wonder: What sort of changes will the Legislature and governor make in the way the state funds its roads and highways? Political observers in Michigan expect some sort of compromise among competing plans passed by the House and Senate, but the specifics are still lacking.

According to projections from the state and University of Michigan economists, under the House-passed road plan – which devotes $1 billion more to roads with no tax hike – school funding will increase from $11.5 billion in 2014 to $14.0 billion in 2023. With the Senate plan – which devotes $1 billion more to roads by doubling the state gas tax – the School Aid Fund would increase to $14.9 billion by 2023.

The Michigan Senate works out to 10 cents a gallon. The House alternative plan wouldn’t raise the price at the pump. The House plan gets rid of the sales tax that’s levied when motorists buy gas or diesel fuel and replaces it with one that would actually be used for roads. Money from the current retail tax does not go toward road building or road maintenance.

Meanwhile, Gov. Rick Snyder wants a more aggressive gas tax hike than the House or Senate plans call for. Snyder says the state needs to bring in $1.2 billion to fix the roads, and do so quicker than either plan would allow.

All of this is playing out in the current lame-duck session of the Legislature, which is scheduled to end on Dec. 18. Michigan Capitol Confidential asked Ari Adler, spokesman for House Speaker Jase Bolger, R-Marshall, about the possibility of a compromise plan.

“Certainly that’s a possibility,” Adler said. “When you’re talking about the Legislature there is always the possibly for some kind of compromise.”

There have been no public discussions of what a compromise would entail, including the amount of a tax increase, and what the state would do about the sales tax, which has persistently complicated the road funding issue for years.

Political observers say that while this lame-duck session may provide the best chance for getting an agreement, they’re not confident that it will happen.

“I haven’t heard anything about any sort of compromise or hybrid legislation somehow combining both plans,” said Bill Ballenger, founder of Inside Michigan Politics. “When you look at how far apart the approaches taken by the House and Senate are, it makes you wonder how anyone would go about brokering a deal. As someone who is very much in favor of them coming up with something to get our roads fixed, I will say that I was pleasantly surprised and a little bit amazed that they have even come this close. But I’m still not holding my breath. So the way I’m looking at it; I’ll just wait and see what the final product is, if there is one.”

“To me, the lame duck session probably does provide the best opportunity for them to resolve this issue,” Ballenger continued. “It is generally believed that next year the Legislature will not only have larger Republican caucuses in both the House and Senate but will also be more conservative overall. It would be interesting to imagine how things might be different during this lame duck if the Democrats had won the House or just increased the number of seats they have in the House – and God only knows what effects it would have had on an issue like this, going forward, if Mark Schauer had won the governor’s race.”

Dennis Darnoi, of Farmington Hills-based Densar Consulting, said he hasn’t heard any talk about working out a compromise between the House and Senate plans.

“I think that Senate Majority Randy Richardville, R-Monroe, was a little bit miffed about passing the Senate plan and then seeing the House come back with something that was so different," Darnoi said. "I don’t think the governor whole-heartedly likes either plan, and he is just commending the Senate for what it passed because he prefers it over the House plan. So at least outwardly I think what most people are sensing is just more consternation.”

“As far as the lame duck session providing the best chance for some kind of road funding package to be adopted, I’d say yeah, it probably does,” Darnoi added. “When you consider that the composition of the next Legislature is likely to be a tougher audience, you’d think that reality alone would provide enough inspiration to see to it that some sort of an agreement is reached now. But at the moment that doesn’t seem to be the case.”

Political strategist Bob Kolt, of Okemos-based Kolt Communications, said the deadlock has taken him beyond the point of frustration.

“What I’ve heard is nothing – just nothing. I’ve just watched it and to me it’s becoming a comic tragedy,” Kolt said. “They are just standing around saying something has to be done but it appears that the leaders aren’t leading them anywhere. It’s amazing that the governor has made this his top priority, legislators of his own party have made it their top priority, yet nothing seems to come together. I don’t think the public cares much about the specific numbers, they just want the roads to get fixed; instead all they’ve been getting is lip service.”

“I think this goes beyond what’s happening now in this particular lame duck session,” Kolt continued. “To me, it’s unforgivable that something hasn’t happened on this a lot earlier. For quite a while, we’ve had everyone, and I mean everyone, saying ‘yeah, yeah, we need to take care of this,’ but when it has come down to actually doing it, they just can’t get together and do the right thing.”

John Truscott of Lansing-based Truscott Rossman Group, says there will be a compromise eventually, even though nobody is talking about one now.

“It doesn’t bother me that no one seems to be talking about the kinds of compromises they might be considering,” Truscott said. “In fact, the best way to kill a potential compromise is for it to be leaked to the public ahead of time. Gov. Snyder and the legislative leaders have all made road funding the priority; I can only assume that there is a lot going on right now that we’re just not aware of.”

“I do think that the best shot they have of getting this done is probably in the lame duck session,” Truscott added. “I think it would be very difficult to do it later. During the first six months of next year there will be a lot of new legislators at the Capitol and it takes a while to be brought up to speed on all the aspects of this issue. Then, once you get into the spring, you’re looking at the start of another construction season with bids going out; and then beyond that we’ll be more than halfway past the middle of next year.”

State funding for public schools is projected to increase by $2.5 billion over the next eight years, even if a House GOP plan is adopted that would shift some sales tax revenue from schools to roads, according to a Mackinac Center for Public Policy analysis.

James Hohman, assistant director of fiscal policy for the Mackinac Center, projects that under the House-passed road plan, school funding will still increase from $11.5 billion in 2014 to $14.0 billion in 2023. Without the House plan, the School Aid Fund would increase to $14.9 billion by 2023.

The projections are based on an estimate of 2.8 percent average growth in state tax revenues earmarked to public schools over the next eight years. The figure comes from extending the shorter-term growth projections of the most recent state revenue estimating conference, which reflects the consensus view of the Department of Treasury and the legislative fiscal agencies, with input from University of Michigan economists.

“Economic growth matters,” Hohman said.

Media reports asserting the House road funding bills would cause Michigan’s public schools to lose money are misleading, he said.

The House package would gradually shift around $1 billion of state tax revenue to roads over six years, with no net tax increase (total state revenue is now about $30 billion, federal dollars excluded). Under House Bill 4539, fuel purchases would be exempt from the 6-percent state sales tax (none of which goes to roads). This is linked to HB 5477, which would increase the tax on gas and diesel fuel, and shift the levy to a wholesale tax rather than one imposed at the pump. The revenue shift would be phased in over six years, and would result in no net tax increase.

With the state experiencing an economic recovery, revenue from the state’s education property tax, sales tax and income tax are all increasing. Those taxes are major sources of school funding.

For example, sales tax revenue has increased from $6.09 billion in 2009 to $7.05 billion in 2013. Individual income tax revenue has increased from $5.86 billion in 2009 to $8.27 billion in 2013.

Much of that revenue flows through a state School Aid Fund. Nothing prohibits the Legislature from appropriating additional state tax revenue to schools, which it has done several times in recent years.

“Michigan is entering its fifth year of recovery and this means more revenue for the state budget,” Hohman said, adding that the GOP’s House package allows for both increased school and road funding without raising taxes.

A road funding plan passed by the Senate in November makes no changes to current revenue allocations, and would instead phase in a net fuel tax increase of around $1.2 billion annually.