Earmarking Increasing Government Revenue to Roads Is a Good Idea

MLive columnist Susan Demas is angry over a House-passed proposal to earmark $600 million of state income tax receipts each year to road repairs by 2021, and also forego another $200 million by expanding an income tax homestead credit.

Demas writes, “It's a double-barreled hit to fiscal sanity. The state's $9.9 billion general fund would see almost a 10 percent cut ($806 million) by 2021 — that will inevitably mean more budget cuts.”

ForTheRecord says: The State of Michigan will raise and spend $29.1 billion this year, not counting federal dollars. The money goes into several pots, not just the $9.9 billion general fund.

Revenue collections are projected to rise more than $700 million next year alone. If tax collections keep increasing at that rate, state revenues will be pushing $32 billion by the time the House road plan is fully implemented in the 2021-22 fiscal year.

That’s nearly $3 billion more than the state currently collects each year — and more than triple the annual $800 million road fix and tax credit diversions the House has approved. Even if revenues grow at half that rate it still covers the House proposal, without cutting a penny from other spending.

And those projections don’t even include increased collections from higher gas and vehicle registration taxes also passed by the House, which will add another $400 million annually (after foregone revenue from the home tax credit changes are netted-out).

“GOP politicians don't care,” accuses Demas. Maybe. Or maybe they just have a better handle on state revenue trends.