Commentary
House Road Plan Secures Road Funding
Road funding does not rely on an increasing budget
The largest portion of the Michigan House Republican road funding plan earmarks a portion of state income tax revenue. This has been criticized as unfeasible because it allegedly relies on future revenue growth. The plan, however, is not contingent on revenue increases. Growth is expected, but the plan does not rely on it.
House Bill 4605 would earmark $192 million of state income tax revenue next year to roads and ramp up to $717 million in 2019. The bill places these dollar amounts in statute, meaning that money will go to the roads regardless of whether income tax revenues increase or decrease. (Though it is important to note that state revenue has been and is projected to continue increasing.)
This is not a large earmark. The proposed $192 million amounts to just 3 percent of the currently unearmarked portion of income tax revenue. Even after being fully phased in, the earmark will still leave about 88 percent of unearmarked revenue available for other spending — and probably more, given likely revenue growth. The largest earmark of income tax revenue is a 23.8 percent allocation for the School Aid Fund.
Some may argue that statutory protections are insufficient to ensure that money keeps flowing from the income tax to the roads. But that can also be said about all the other earmarks scattered through the state tax code.
Moreover, policymakers would have a powerful incentive to keep this earmark: the 80-20 loss from Proposal 1. Voters indicated that legislators should first find money within the state budget to pay for the roads. No other statutory earmark can claim this strong of voter support.
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House Road Plan Secures Road Funding
Road funding does not rely on an increasing budget
The largest portion of the Michigan House Republican road funding plan earmarks a portion of state income tax revenue. This has been criticized as unfeasible because it allegedly relies on future revenue growth. The plan, however, is not contingent on revenue increases. Growth is expected, but the plan does not rely on it.
House Bill 4605 would earmark $192 million of state income tax revenue next year to roads and ramp up to $717 million in 2019. The bill places these dollar amounts in statute, meaning that money will go to the roads regardless of whether income tax revenues increase or decrease. (Though it is important to note that state revenue has been and is projected to continue increasing.)
This is not a large earmark. The proposed $192 million amounts to just 3 percent of the currently unearmarked portion of income tax revenue. Even after being fully phased in, the earmark will still leave about 88 percent of unearmarked revenue available for other spending — and probably more, given likely revenue growth. The largest earmark of income tax revenue is a 23.8 percent allocation for the School Aid Fund.
Some may argue that statutory protections are insufficient to ensure that money keeps flowing from the income tax to the roads. But that can also be said about all the other earmarks scattered through the state tax code.
Moreover, policymakers would have a powerful incentive to keep this earmark: the 80-20 loss from Proposal 1. Voters indicated that legislators should first find money within the state budget to pay for the roads. No other statutory earmark can claim this strong of voter support.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
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