Michigan considering 15-cent gas tax hike

Michigan is considering increasing the amount of money drivers in their state will have to pay at the pump to help pay for transportation projects as federal road funding dries up, The Associated Press reports. 

Legislation has been introduced in the Michigan state Senate that would increase the state’s 19 cents-per-gallon excise tax on gas purchases by 15 cents over the next three years, according to the report.

The new Michigan fuel levy, which would be the state’s first increase since 1994, will be collected on top of an 18.4-cents-per-gallon federal gas tax that is charged to all drivers in the nation to fill the federal government’s transportation funding coffers and approximately 17 cents-per-gallon in additional state fees on fuel purchases. 

{mosads}The American Petroleum Institute says the gas tax increase will bring the total amount of money that drivers in Michigan are charged at the pump to nearly 70 cents per gallon by 2018. 

Michigan is the latest to consider increasing its gas tax in recent years as the future of federal transportation funding looks uncertain. Six states implemented such hikes on July 1. 

Lawmakers in Congress are currently facing a July 31 deadline for the expiration of federal transportation funding, and they are struggling to come up with a way to pay for a long-term extension of the measure after passing a patch in May that last only two months. 

Transportation advocates in Washington have pointed to the willingness of states like Michigan to raise their own gas tax as evidence that a national hike would be politically palatable this year. 

Conservative groups in Washington have made clear that they would consider an increase in the federal fuel levy a tax hike, however, and Republican lawmakers have ruled out such a hike.

The national gas tax has been the traditional source of transportation funding since its inception in the 1930s. The tax has not been increased since 1993, however, and improvements in auto fuel efficiency have sapped its purchasing power. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually at its current rate. 

Lawmakers have turned to other areas of the federal budget in recent years to close the $16 billion per year gap, but transportation advocates have said the resulting temporary funding measures are preventing states from completing large construction projects.