Michigan Proposes 18 Cent Diesel Fuel Tax

In another move to hurt the bottom line of small trucking companies, Michigan Governor Rick Snyder this week announced plans to boost the cost of diesel fuel another $0.18 cents for the first time since 1984. The reason? State budget shortfalls for road and bridge improvements and maintenance.

The Republican governor acknowledged it will be “difficult” to get the GOP-controlled Legislature to raise the 19-cent gas tax and 18-cent diesel tax to 33 cents per gallon, plus hike motor vehicle registration fees 60 percent on cars and 25 percent on trucks and trailers.

“This is hard, but it’s important,” Snyder said in an interview with The Detroit News Editorial Board.

The governor’s proposed spending plan also includes increasing the gasoline tax by 14 cents to the 33-cent level, with both taxes fluctuating after a few years, depending on fuel consumption, AP reported. This comes about after the state reported a shortfall of nearly $1.3 billion for the state’s ailing highway and transportation infrastructure, which includes roads, bus and rail.

Walt Heinritzi, executive director of the Michigan Trucking Association, told the Detroit News that his group understands the need to raise the diesel tax and despite opposition from small carriers, feels the hike is justified.

Snyder’s plan would make Michigan’s gas taxes the highest in the country, according to the Michigan Petroleum Association.

While the governor pushes for more money for roads, Democrats in the Legislature are threatening to withhold crucial votes on Snyder’s gas and vehicle taxes if Republicans pursue legislation to repeal the state’s prevailing wage law.

Conservatives and nonunion contractors said the prevailing wage law, which requires union-level wage rates, adds tens of millions to the cost of highway projects annually.

On Thursday, Snyder sidestepped a reporter’s question about whether eliminating prevailing wage was on his transportation agenda.

“That’s a very divisive issue,” Snyder said. “I’d say that’s not something I’m interested in working on.”