On May 5, 2015, Michigan will be voting on the sales tax amendment to the state’s constitution. This amendment should be declined with a solid “NO” vote.
There are several components in the package. Increasing the sales tax rate from 6% to 7% is one, and it will probably get the most attention, but the other components are also important. Gasoline or diesel fuel used as a motor fuel would be permanently exempted from sale or use taxes. The percentage allocated to townships, cities and villages would increase. The percentage allocated to “education” would increase, but the definition of “education” would also be expanded in some questionable ways.
It’s really important to note that the points listed above are the only things that are being voted up or down. It is true that there is a package of bills allocating state funds for various purposes including public transportation which would be “triggered” by passage of the proposed amendment.
However, the amendment itself is the only aspect that would be beyond the ability of the legislature to change if the vote is “Yes.” The bills could be modified or repealed by the legislature immediately, or later this year, or next year, or at any later date.
The only long term – we could call it more or less permanent, for practical purposes – change to Michigan law would be the terms of the amendment itself. Whether to vote the amendment up or down should be decided almost entirely on the basis of whether you favor the amendment itself.
We will certainly hear a lot about the effects of the bills to be triggered, but that’s simply advertising to influence the vote. The importance of bills to be triggered by passage should be weighted by how much you trust the legislature, and any future legislatures, to actually work for policies you approve.
When the tax rate was changed from 4% to 6% a couple of decades ago, the change was sold with promises that revenue sharing for schools and cities would fix all the financial problems of schools and cities. What actually happened since then is that tax cuts, tax breaks and revenue reallocations by the state government combined with dropping property values resulting in dropping revenues from property taxes to make the financial problems of cities and schools as bad as before.
This time around, the related bills promise, among other things, an immediate increase in financing for public transportation. That is simply a short-term reality. There is no guarantee that the increase in public transportation funding will even last through 2016, let alone for the decades it would take to create a good public transportation infrastructure in Michigan.
In the long run, if this amendment passes, we could have a 7% tax rate and poor, underfinanced public transportation, just as we now have a 6% tax and financially stressed schools and cities.
A simple reference document showing the relevant sections of the Michigan Constitution as they now exist and as they would be changed has been created. It’s available for download at: https://migreenparty.files.wordpress.com/2015/01/mi-amendment-2015.pdf
The first part of the amendment is fairly simple. It changes the base rate of the sales tax from 4% to 5%. The previous amendment that, in 1994, made the overall rate 6%, allocated revenues from the additional 2% on top of the 4% base rate to a school aid fund. It left the base rate of 4% unchanged. This current amendment does not propose to change the allocation of the additional 2%. It just redefines the 2% as being above the base 5%.
The next part adds the following language to the Constitution’s Section 8: “No sales tax or use tax shall be charged or collected from and after October 1, 2015 on the sale or use of gasoline or diesel fuel used to operate a motor vehicle on the public roads or highways of this state.” It means that roads will no longer be financed by taxes on fuel burned by traffic on the roads. This part of the amendment not only moves away from the idea of having people and businesses that use the roads pay for the roads; it also precludes any possibility of a state “carbon tax” or “carbon fee and dividend” being applied to motor fuels.
The final part of the amendment package is a redefinition of the purposes of the state school aid fund. In the existing constitution, it is defined as “aid to school districts, higher education, and school employees’ retirement systems.” The amendment would change this to: “aid to school districts, public community colleges, public career and technical education programs, scholarships for students attending either public community colleges or public career and technical education programs, and school employees’ retirement systems.”
The motive for this expanded definition is not clear. If the intent is for the school aid fund to be used as it is now used, then no redefinition is needed at all. Apparently there is an intent to redirect the school aid fund for some purpose not now acceptable. Is there, in this clause, some legal justification for funneling state education money to charter schools or other private schools, perhaps through “scholarships?”
In any case, this expansion of “higher education” into a variety of other purposes is part of the package, and it must be voted up or down as the whole package is voted up or down. As there is no sensible explanation of why this portion of the constitution should be amended, we can fairly suspect some hidden purpose that we will not like when we find out about it.
In sum, this proposed amendment to the Constitution of Michigan would:
- Increase a regressive tax.
- Permanently exempt gasoline and diesel fuel from state sales and use taxes.
- Redefine “higher education” for no obvious reason.
Overall, there is not enough reason to vote for this amendment, and plenty of reason to vote against it. Without the amendment, the legislature is perfectly capable of raising taxes on gasoline and diesel fuel, demanding higher royalties for mineral extraction, reallocating funds from nonessential expenses and generally doing the job that they are supposed to do. This amendment is proposed, at least in part, to shift the blame for an unpopular tax hike to the voters. We should vote down this amendment and force the legislature and the governor to be responsible for the budget they create.
Vote NO on May 5.
That’s my opinion. What’s yours?
(This post, with the correct date for the election, replaces an earlier post with a typo in the worst possible place. Also, since the original post, “Vote NO on May 5” has become the officially endorsed position of the Green Party of Michigan.)