School district supports Proposal 1

By: Victoria Mitchell | Royal Oak Review | Published March 30, 2015

 Potholes and other road repairs are up for discussion as voters debate Proposal 1. The proposal will be on the ballot during a special statewide election May 5.

Potholes and other road repairs are up for discussion as voters debate Proposal 1. The proposal will be on the ballot during a special statewide election May 5.

Photo by Victoria Mitchell

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ROYAL OAK — Local leaders are supporting Michigan’s Proposal 1, which they say has a direct impact on government and education, while others raise questions about the plan.

Members of the Royal Oak Schools Board of Education unanimously adopted a resolution March 12 showing that the district supports a Proposal 1 “yes” vote during the special statewide election May 5.

“First and foremost, this is about safety. Everyone agrees that our roads need to be repaired. Proposal 1 fixes our roads and does so without undermining funding for schools,” Royal Oak Schools Superintendent Shawn Lewis-Lakin said. “Proposal 1 recognizes that our roads and our schools are both critical to the economic vitality of our state and local community.”

The superintendent said that along with additional funding for education, road repairs would mean safer roads for buses and students who drive to school.

He said new investments in transportation infrastructure would spur economic development that attracts more students to local schools.

In an analysis of Proposal 1 issued on March 25 by the Mackinac Center for Public Policy, which describes itself as drawing “support from market-oriented libertarians, moderates and conservatives,” James Hohman stated that approval “would increase the tax burden of the typical Michigan household by about $500 in 2016.”

Hohman, author of the study and assistant director of fiscal policy at the Mackinac Center, said he used data from the U.S. Census Bureau, U.S. Department of Transportation and the U.S. Bureau of Labor Statistics.

“These estimates rely on assumptions about the average price of gasoline and other factors, but they’re about as close as one can get to figuring out about how much taxpayers would pay if voters approve of this plan to increase funding for roads,” Hohman stated in a press release.

Proposal 1 passage would remove the sales tax from the pump and replace it with an increase in the gas tax that would be guaranteed to go toward transportation, including roads. Passage would mean constitutional protection to school-aid funding for K-12 schools and community colleges.

Supporters believe that because this replacement will happen, there would be virtually no difference in the price at the pump. The new gas tax rate will be 14.9 percent at the wholesale level, equating to about 41.7 cents per gallon. Hohman estimates that consumers could pay about 10 cents more per gallon.

“The difference between the proposed gas tax and the current one depends a lot on the price of gasoline. But only when gasoline prices exceed $4.20 per gallon will consumers start to pay less at the pump under Proposal 1,” Hohman stated.

Hohman could not be reached for comment at press time.

Cindy Dingell, of the Road Commission for Oakland County, said the last increase in the gas tax was in 1997.

The proposal’s passage also would raise the statewide sales tax 1 percent — from 6 percent to 7 percent — to make up for the loss of revenues to schools and local governments resulting from the elimination of the sales tax on gas. The sales tax increase would not apply to food and prescription drugs.

Lewis-Lakin said the state would remain competitive with the 1 percent increase in sales tax. He said that when looking at state and average local sales tax rates of nearby states, only Wisconsin (5.43 percent) and Pennsylvania (6.34 percent) would have a lower rate. He said 7 percent would still be lower than Ohio (7.11 percent), Illinois (8.16 percent), New York (8.47 percent) and Minnesota (7.19 percent). Those numbers can be found at taxfoundation.org.

Supporters say an election victory would pay down Michigan’s transportation debt, fix structural problems with roads and bridges, protect and increase K-12 education funding, return money to communities through state-shared revenue, and restore the earned income tax credit to 20 percent of the federal earned income tax credit.

Dingell said other impacts of Proposal 1 include an increase in diesel tax and registration fees for heavy trucks, electric cars and hybrids. She said improved roads would mean less in car repairs.

“I know that I just had a $429 bill for my repair,” she said during a March 17 presentation at Clawson City Hall.

According to Lewis-Lakin, Proposal 1 would direct $1.2 billion annually to roads and bridges. Additional sales tax dollars would direct $200 million to the School Aid Fund, nearly $100 million to local governments, $260 million to the Earned Income Tax Credit, and $112 million to rail/mass transit.

City Manager Don Johnson estimated that Royal Oak could receive an additional $1.7 million for major streets and $500,000 for local streets, representing a 60 percent increase in state funding.

Johnson said if the statewide proposal is approved by voters, it may enable the city to reduce the amount levied of the 2.5 mills voters approved in November 2014 for capital repairs to the city’s street system, including roads, or it could accelerate the street program repairs timeline.

“We would have to decide which approach we would take on it,” Johnson said. “This would generate a little bit less than half of what the road millage is going to generate, as far as to Royal Oak.”

The City Commission has not taken an official position on Proposal 1; however, Johnson said he personally is for the ballot initiative.

“We do end up with roads being paid for by road users, which I think is appropriate,” he said. “While fuel taxes isn’t an exact parallel to use, it’s pretty darn close. People who use the roads more, pay more. People who drive bigger, heavier vehicles that put more damage on the roads will pay more.”

Johnson said the city has already taken action to take care of local roads, but the problem is much broader than Royal Oak.

“I think that the real issue is that we have totally let our roads go,” Johnson said. “Michigan used to have some of the better roads, and now we have some of the worst in the country,” Johnson said.

Dingell said the Road Commission for Oakland County would receive $14 million in new revenue in year one, $27 million in year two and an estimated $41 million in year three.

Bill McMaster, state chairman of Taxpayers United, has spoken out against Proposal 1, stating that although Gov. Rick Snyder has denied it, at least $50 million of the proposed $1.2 billion to fix roads would go toward the Detroit River bridge project. McMaster could not be reached for comment at press time.

Lewis-Lakin said the Board of Education resolution was signed at the same time Snyder signed an amendment for this year’s state budget, which transferred $167 million from the School Aid Fund to fill a hole in the state’s general fund.

“That practice of using the School Aid Fund to backfill shortfalls in the general fund is of great concern,” Lewis-Lakin said.

“There is a proposal on the ballot, Proposal 1 on May 5 — the roads funding proposal — that would put an end to that practice and would put some constitutional guarantees around the School Aid Fund,” he said.

Lewis-Lakin said Proposal 1 would prevent the fund from being raided for public universities.

“I’m convinced that there will be a plan to repair roads. My greatest fear is that if that plan is not Proposal 1, the plan is going to be a plan that repairs roads on the backs of our schools and students,” Lewis-Lakin said. “Because frankly, those are the alternative plans that I have seen in the Legislature.”

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