05/06/2015 05:52 pm ET Updated May 06, 2015

Michigan Voters Reject Tax Increase To Fund Roads, Bridges

Michigan voters in a special election on Tuesday overwhelmingly voted down Proposal 1, an amendment to the state's constitution that would have increased the state sales tax to fund transportation infrastructure.

Of nearly 1.8 million Michigan residents who voted, 1.4 million -- 80 percent -- voted against the amendment, according to the Office of the Michigan Secretary of State.

Proposal 1 would have increased the state sales tax from 6 percent to 7 percent, raising $1.3 billion for roads, according to Michigan’s nonpartisan House Fiscal Agency. It would have raised an additional $600 million in revenue to the state for other purposes, such as an increase in the state’s Earned Income Tax Credit.

Proposal 1's defeat at the polls was a loss for Gov. Rick Snyder (R), who pushed for the measure as a way to fund improvements in the state's transportation infrastructure.

Responding to the results on Tuesday, Snyder committed to finding an alternative solution to the state's infrastructure problems.

"While voters didn’t support this particular proposal, we know they want action taken to maintain and improve our roads and bridges," Snyder said in a statement. "The 'relentless' part of relentless positive action means that we start anew to find a comprehensive, long-term solution to this problem."

In a pre-election Detroit Free Press/WXYZ-TV poll, 64 percent of respondents said they would support a sales tax increase of 1 percentage point if it were dedicated to roads, bridges and other transportation infrastructure. The same poll showed that 61 percent of voters intended to vote against Proposal 1, indicating opposition may have been rooted in concerns about the new revenue going to non-infrastructure projects.

Perhaps appealing to these concerns, conservative groups attacked the amendment as a handout to “special interests.”

“Voters will be sending almost 40% of this proposal to projects not related to the roads,” the opposition group Coalition Against Higher Taxes and Special Interest Deals claimed on its website. “Proposal 1 is not a good solution, it’s a special interest, back room deal-making hodge-podge.”

According to the Detroit News, the Coalition Against Higher Taxes and Special Interest Deals was one of at least four major state-level groups formed specifically to oppose the bill.

Progress Michigan argued that Proposal 1’s defeat reflected voter disapproval of Snyder’s corporate tax cuts and not of tax increases altogether.

“Tonight’s vote is a clear rejection of Gov. Snyder’s anti-family economic policies,” said Lonnie Scott, executive director of Progress Michigan. “Voters want everyone to pay their fair share to fix the roads -- including Gov. Snyder’s corporate donors and his business allies.”

Proposal 1 did not enjoy the unified support of the business community. The Michigan Chamber of Commerce did not take a position on the measure.

Richard Studley, president and CEO of the Michigan Chamber of Commerce, told The Huffington Post that the Chamber’s decision was based on the differences of opinion about Proposal 1 among its member businesses. While construction companies, for example, supported Proposal 1, Studley said some retailers and wholesalers were concerned about the impact it would have on their sales.

Progressive groups were also ambivalent about Proposal 1. Since the amendment would increase the state’s sales tax, it was viewed as a regressive tax increase.

The liberal-leaning Michigan League for Public Policy predicated its support for the measure on the amendment’s inclusion of an increase in the Earned Income Tax Credit for low-income earners. The League said it would continue to push for an increase in the Earned Income Tax Credit.

In the wake of Proposal 1’s defeat, the Michigan Chamber of Commerce is calling on the state legislature to act to increase infrastructure funding.

"We think it can and should be done through the legislative process over the next few weeks and months," said Richard Studley, Michigan Chamber of Commerce president.

The Chamber would support funding the increase through fuel taxes or motor vehicle registration fees, Studley said.

The American Society of Civil Engineers gave Michigan’s infrastructure a “D” grade in 2013, the year of its most recent state-level assessment. The group said the state has 1,298 structurally deficient bridges, and 22 percent of its roads are in need of repair.



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