Mix of solutions may be needed to fund state roads

LANSING, Mich. – Every time a Michigan driver pulls up to the pump for gasoline, the per-gallon price includes 18.4 cents in federal gasoline taxes and 19 cents in Michigan gasoline taxes.

That doesn’t change, no matter how high the price of gasoline goes. But as motorists deal with prices hovering near $3 a gallon, there has been talk of taking steps to decrease the tax temporarily or give drivers a break if they use alternative fuels.

A bill now on Gov. Jennifer Granholm’s desk would lower the state tax on each gallon of fuel containing at least 70 percent ethanol to 12 cents, a 7-cent drop. The Legislature would set aside $2.5 million to finance the tax cut for up to 10 years. The bill also would lower the tax on biodiesel fuel from 15 cents per gallon to 12 cents.

The average driver who uses E85 fuel would save about $35 in taxes each year.

But some policymakers are urging a move in the opposite direction, toward either a higher state gasoline tax or some other way of raising more money for roads, bridges and other transportation needs.

AP