By a resounding 80-20 margin, Michigan voters on Tuesday defeated a referendum that would have raised gas and sales taxes in the state by $2 billion.
Proposal 1, which had the support of legislative leaders and Republican Gov. Rick Snyder, called for increasing the state sales tax from 6 percent to 7 percent, as well as converting the gasoline tax from 19 cents-per-gallon to 14.9 percent, to raise revenue for roads and schools, according to Bloomberg.
At a hypothetical gas price of $3 per gallon, the new formula would have more than doubled the taxes on a gallon of gasoline, from 19 cents to just under 45 cents. Looked at another way, gas prices would have had to fall below $1.28 per gallon for consumers to break even on the switch. (RELATED: Highway Trust Fund Almost Broke, Senators Propose Gas Tax)
Had the ballot measure been approved, it would have raised a little more than $2 billion in new tax revenue, of which about $1.3 billion was earmarked for road and bridge construction, with another $800 million spread between public schools, local governments, mass transit and the state general fund.
Beyond the difficulty of asking voters to raise taxes on themselves, Prop. 1 also suffered from excessive complexity, Michigan Live reports.
“I really feel the proposal was too convoluted, too many pieces,” one voter told M Live, adding that she probably would have voted yes if the referendum had been limited to a modest sales tax increase to pay for roads. (RELATED: State Lawmakers Should Pump the Brakes on Gas Tax Hikes)
The lopsided result came about even though “the coalition of spending interests pushing the tax increase outspent their opponents 17 – 1,” the anti-tax group Americans for Tax Reform notes in a blog post. Public records, the post claims, reveal that supporters of Prop. 1 raised $9,049,010 for the campaign, whereas tax hike opponents raised just $519,138.
“The tax and spenders and their advocates in the media thought they had finally found the secret sauce: hold highway spending hostage to higher taxes,” said ATR President Grover Norquist. But “the verdict is now in from Michigan,” he added, and it is “a big no.” (RELATED: Poll: Voters Resoundingly Reject Gas Tax Increase)
Even some Democratic legislators found themselves in the rare position of agreeing with ATR’s analysis.
“The public definitely wants the roads fixed,” Democratic House Minority Leader Tim Greimel told M Live, “but what they don’t want is to have to pay more than their fair share to get the job done.”
Snyder echoed those sentiments in a prepared statement, saying, “While voters didn’t support this particular proposal, we know they want action taken to maintain and improve our roads and bridges.”
Asserting that “doing nothing is not an option,” Snyder vowed that he would work with the Legislature to devise an alternative approach “that gives Michigan residents the safe roads they need and deserve and bolsters our growing economy.”
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