Advocacy News – March 10, 2022
With gas prices soaring and Michiganders now paying an average of $4.25 per gallon with higher jumps expected, elected leaders are understandably eager to bring down prices at the pump. President Biden, Governor Whitmer and leaders in the Michigan House and Senate have all put proposals on the table, but what makes sense and what will move the needle?
President Biden and Congressional Proposals
On Tuesday, President Biden announced that the United States will be placing sanctions on imports of Russian oil and other energy products in an attempt to hinder the “main artery of the Russian economy…to ensure we are not subsidizing Putin’s war.”
According to the Energy Information Agency, Russian crude oil and petroleum accounted for 8% of U.S. imports in 2021, compared to over 50% of U.S. imports from Canada. To read more from the U.S. Chamber of Commerce regarding U.S. sanctions on Russia and key financial players, click here.
As Biden announced Russian oil sanctions, he indicated that he would take measures to ensure citizens did not feel the effects of the sanctions when they go to pay at the pump. In addition, considering gas prices were historically high even before the sanction was announced, U.S. Senators Mark Kelly (D-Arizona) and Maggie Hassan (D-New Hampshire) introduced The Gas Prices Relief Act, which would suspend the federal 18.4 cent tax on gas for the remainder of 2022. However, the push for temporary relief could create unintended consequences for the economy and infrastructure.
The Committee for a Responsible Federal Budget indicated that the elimination of the gas tax, even if just for the remainder of 2022, would cost the federal Highway Trust Fund $20 billion, cutting the highway maintenance fund in half. Should the gas tax be eliminated, and supply already increasingly higher than demand, inflation will likely continue to continue to rise, further straining the American economy and unnecessarily impacting federal infrastructure projects.
Governor Whitmer’s Plan
After the President’s statement Tuesday, Governor Whitmer joined five other governors in a letter urging Congress to address rising gas prices by suspending the federal gas tax until the end of the year. To read the letter, click here.
Whitmer’s office said Wednesday that a federal gas tax suspension was the “best way to bring down the price of gas without impacting our ability to fix the damn roads.”
If the federal government were to pause on the federal gas tax, it would save drivers 18-cents-per-gallon.
Michigan GOP-Led Plan
House Speaker Jason Wentworth and Senate Majority Leader Mike Shirkey announced a 27-cent tax suspension plan Wednesday morning in a joint statement. Later in the day, the Michigan House of Representatives passed House Bill 5570 by a vote of 63-39. It would eliminate the state gas tax until Oct. 1, 2022.
Revenue from Michigan’s 27-cent excise tax on gas goes into the Michigan Transportation Fund (MTF), which is divvied up among state trunk lines, cities and villages, and county road commissions. It is estimated that a temporary pause of the tax would result in $725 million impact to the MTF.
The legislature says it’s planning to backfill the estimated $725 million hole with part of the roughly $4 billion general fund surplus the state currently has.
House Bill 5570 moves to the Senate next and is expected to be passed in the upper chamber next week.
Senate Democratic Leader Floats Another Idea
On Wednesday, State Senate Democratic leader Jim Ananich proposed an alternative to the House and Senate plans. He proposed suspending the state’s 6% sales tax on gasoline, which would come to about 24 cents per gallon if gas were at $4 a gallon — a total savings that he said would be similar to the excise tax pause proposed by Republican legislative leaders. He says, if the federal gas tax were also suspended, Michigan residents would save an estimated 42 cents a gallon.
Energy Independence
Also on Wednesday, the Michigan House and Senate approved resolutions urging policies that will help the United States to become energy independent, including the “continued safe operation of the Line 5 oil pipeline,” a Canadian-based pipeline. The resolution passed along a party line vote in the Senate (22-14), but received bipartisan support in the House (62-40).
The Michigan Chamber is currently looking for member feedback on these proposals. If you would like to provide comment or have any questions, please contact Leah Robinson at lrobinson@michamber.com.