House Bill 4539 cuts school, transit, city funds $1 Billion

house bill gas web pic

Benjamin Gohs

News Editor

Legislation recently passed in the Michigan House of Representatives could negatively impact funding for schools, municipalities and transit authorities across the state.

Charlevoix County Transit System Manager Jill Drury briefed the Boyne City Commission on Michigan House Bill 4539 during the commission’s regular Tuesday Dec. 9 meeting.

“Unfortunately, with the house bill that’s being presented, they’re leaving an essential part of funding out of that package,” said Drury.

According to the House Fiscal Agency legislative analysis, the current incarnation of HB 4539 would result in lost revenue that would, in turn, reduce funding to the School Aid Fund, constitutional revenue sharing, the Comprehensive Transportation Fund and the general fund.

“By the time motor fuels become completely exempt on Jan. 1, 2021, the FY 2020-21 revenue loss is estimated to exceed $1 billion,” it states in the legislative analysis.

HB 4539, sponsored by Rep. Wayne Schmidt, is aimed at revising motor fuel tax rates but is part of a larger package of bills dealing with fuel taxes.

“House Bill 4539, as amended, would amend the Sales Tax Act (1933 PA 167) to eliminate the sales tax imposed on purchases of eligible motor fuel—primarily gasoline and diesel—over a six-year period beginning Jan. 1, 2016,” the legislative analysis continues. “The bill contains a provision that, if total state appropriations to either the school aid budget or combined revenue sharing and transportation payments to local units of government fall below the prior fiscal year amounts, the sales tax rate will revert back to 6 percent for that fiscal year.”

Drury said she has heard that this bill was proposed in order to kick off discussion on the matter.
“The senate, earlier in the year, passed a very different package for transportation funding,” she said. “In that package, it included all of the revenue going through the full funding stream.”

Drury then gave commissioners an idea of how such funding cuts might affect the local transit service, which provides bus rides to people all over Charlevoix County.

“Transit did 117,344 rides last year here in Charlevoix County,” she said. “Of that … about 68,000 rides were for shopping in all three communities, to the local schools—the bulk of that is coming into Boyne City (Public Schools) and Concord (Academy Boyne), and the other portion of that was for work—the surprising thing is we’re running almost 18,000 trips for people getting back and forth to work.”

Drury said the state’s funding formula is convoluted and hard numbers have yet to come in, but she said the projected changes could mean a loss of four to six percent to the transit authority alone.

“If we took a six percent funding cut from the State of Michigan … it would be approximately 200 hours a week of service time. Right now we’re running over 600 hours a week of service time,” she said. “We would have to reduce by 200 hours. We’d have to lay off, minimally, two part-time people.”
Drury added, “The cuts, immediately, would be significant to transit. The cuts are even more significant in dollars to the cities and to the schools.”

Drury said the transit authority would still have its federal funding, millage, and ridership fares.

Drury is asking county residents to contact their senators and representatives to urge them to avoid such drastic cuts.