Gov. Whitmer proposed a long-term road funding plan that includes hiking marijuana taxes, imposing more taxes on large corporations, and cutting about half a million dollars in spending.

The two-page plan says it will levy $1.6 billion by requiring large corporations and big tech “to pay their fair share.” It is unclear which large corporations would be taxed and what spending would be cut.

The plan’s funding hinges on redirecting $500 million in unspecified costs to fix the roads.

Whitmer wants to add the wholesale tax, applied to smoking products like cigarettes, to marijuana. She says that using pot revenue to fix potholes would add another $470 million.

Those three changes would raise about $2.6 billion in revenue. Whitmer also wants to spend $250 million on local bus service.

“Michiganders deserve world-class transit, roads, bridges, and infrastructure,” Whitmer’s road funding plan said. “Let’s work together to fix the damn roads for good and build a brighter future for every Michigan family.”

About 87% of the Michigan companies that pay the corporate income tax have fewer than 100 employees, according to the Michigan Chamber of Commerce.

“Fixing our state's outdated roads and bridges is a key priority for Michigan Chamber members, but not at the expense of our small businesses and our state’s economic competitiveness,” said Wendy Block, senior vice president of business advocacy for the Michigan Chamber, told Michigan Capitol Confidential in an email. “That’s why raising the corporate income tax (CIT) is simply not a viable solution. We look forward to having this critical discussion and policymakers enacting a bipartisan, long-term, fiscally responsible investment plan.”

Michigan’s corporate income tax rate is already higher than the rate of half the states, including Ohio and Indiana. About 16 states have cut their corporate income tax rates since 2018, Block added.

Michiganders don’t need new taxes, said state Rep. Ken Borton, R-Gaylord.

“These taxes could include businesses, retail delivery services like Lyft and Uber, towing, heavy truck parking, and internet advertising,” Borton said in a news release. “It seems like she decided to put a tax on whatever came across her stream of consciousness during whatever planning process she made time for on her book tour. Our proposal would put more money toward our roads and do it without raising taxes.”

Republican lawmakers support a separate $3 billion road funding plan that does not call for raising taxes. The plan would pull $1 billion from subsidy programs, $600 million from the general fund, $500 million from legislative earmarks, and $500 million from the corporate attraction fund. It would dedicate all taxes paid at the pump to fixing the roads, which is expected to raise $945 million each year for local roads.

Whitmer’s recommendations for a $83.5B state budget include funding for 800 new state employees and $1 billion more in spending. It does not suggest a funding mechanism for fixing the roads.

Gov. Gretchen Whitmer posted on social media on Feb. 2 her concern that Michigan residents face higher costs. But many of her policies have imposed their own costs, experts say.

The governor wrote that Michiganders should be able to build a good life for themselves and their families. “That means keeping more of your hard-earned money, lowering costs on essentials, and ensuring opportunity isn't out of reach for anyone” the governor said.

“Perhaps she could be more concerned about what she can do about actual price increases that Michigan families are already facing,” said Theodore Bolema, senior editor at the Mercatus Center, in an email to Michigan Capitol Confidential.

Michigan has the highest electricity in the region, according to Bolema, who is a member of the Board of Scholars at the Mackinac Center for Public Policy.

“These high electricity costs are hurting families right now,” Bolema wrote.

Energy prices are not the only concern of Bolema. He wrote in a blog post on Nov. 24 that the governor reinstated the prevailing wage, which will drive up construction costs for taxpayer-funded government projects.

One of Whitmer’s first efforts as governor was to call for a 45-cent gasoline tax hike to fix the roads. While she said there was not enough money in the budget to repair the roads, she also approved $4.6 billion in corporate welfare during the Democrats’ 2023-24 trifecta.

Since 2001, Whitmer has supported over $16 billion in corporate subsidies.

A recent report by James Hohman, fiscal policy director at the Mackinac Center for Public Policy, concludes that corporate subsidies are a waste of taxpayer money with a 91% failure rate.

Whitmer’s 45-cent tax hike would cost 22,500 private sector jobs, according to Mackinac Center calculations, and it would raise just under $2.5 billion in 2022, or approximately $2 billion less than the corporate welfare she approved during the past two years.

Whitmer has also tried to shut down Line 5, a petroleum pipeline that runs underneath the Straits of Mackinac. Closing the pipeline will likely make energy costs go up. Residents of the Upper Peninsula would feel the effects the most, as they get 65% of their propane from the pipeline.

The governor has also fought attempts to reduce what was supposed to be a temporary increase in the state income tax, vetoing a 2022 bill to cut the tax.

Retaining the higher rate has consequences, an economist told CapCon. “Looking into the future, we are becoming less and less competitive,” said Donald Alexander, professor of economics at Western Michigan University and a member of the Board of Scholars at the Mackinac Center, in a phone interview with CapCon.

“The state’s income tax is one of the metrics used to compare to other states and we wonder why things aren’t gung-ho here,” Alexander added.

Rep. Joseph Aragona, R-Clinton Township, chair of the House Regulatory Reform Committee, criticized the governor’s economic policies. “Here in Michigan the state squandered a $9 billion surplus on swimming pools, electric bicycles, and pet projects. That’s why your personal savings have less buying power, and groceries cost more. If the governor cares about helping people with high prices, she should work with Republican lawmakers to cut wasteful state spending so that we can reduce taxes.”