Governor Whitmer Unveils $3 Billion Plan to Fix Michigan Roads, Proposes New Taxes on Corporations and Marijuana

Governor Gretchen Whitmer has unveiled a comprehensive $3 billion plan to address Michigan’s deteriorating roads, proposing new taxes on large corporations and marijuana products to fund road repairs. The plan, which aims to raise $1.7 billion annually, is part of her ongoing push to improve the state’s infrastructure. Whitmer’s office stated that the initiative seeks to ensure that corporations, particularly large tech companies, pay their fair share for the wear and tear caused by heavy truck traffic on Michigan’s roads.

The proposal comes at a time when Michigan’s road repair needs remain a critical issue. Whitmer first ran for office in 2018 on a promise to “fix the damn roads,” but previous efforts have faced obstacles. Her 2019 proposal to raise fuel taxes by 45 cents per gallon was rejected by the Legislature, and a $3.5 billion bonding plan for road reconstruction in 2020 is now running out of funds. The state is now facing the challenge of how to continue repairs without saddling taxpayers with an unsustainable burden.

The Governor’s office explained that the new plan would focus on ensuring that large corporations, such as Amazon, contribute more to the road maintenance effort. These companies, the governor’s office argues, are responsible for significant road damage due to their use of heavy trucks, and Michigan’s relatively high truck weight limits exacerbate the problem. However, there has been little appetite among lawmakers to revisit these weight limits.

In addition to corporate tax increases, Whitmer’s plan includes a proposal to raise the state’s marijuana tax by 32%. The new wholesale tax would align marijuana taxation with that of tobacco products, which currently have a similar tax structure. Currently, Michigan imposes a 10% excise tax on recreational marijuana, with a portion of that revenue already directed toward road repairs. By increasing this rate, the state hopes to generate additional revenue for infrastructure needs. The proposal also includes a plan to extend similar taxes to nicotine products like vapes and pouches, which have long avoided such taxes.

Whitmer’s plan also calls for the redirection of funds currently generated through fuel taxes. Michigan is one of the few states that applies its 6% sales tax to fuel purchases, generating significant revenue. The governor proposes removing this sales tax on fuel and replacing it with a flat tax based on the historical average of the revenue it generates. This shift would direct more of the funds toward road repair, though her office has not clarified how it would address any potential shortfall to schools and local governments that rely on sales tax funding.

In addition to the corporate and marijuana tax proposals, Whitmer’s plan allocates $1 billion per year for local road repairs. Unlike state highways, local roads are managed by municipalities, and this funding would help address the road repair needs in Michigan’s cities and towns. Whitmer’s office has also indicated that fiscally responsible cuts to other portions of the state budget would free up an additional $500 million for road improvements.

The proposal has received mixed reactions from lawmakers and business leaders. Senate Minority Leader Aric Nesbitt, a Republican from Porter Township, criticized the plan, arguing that it would impose new taxes on businesses and ultimately increase costs for consumers. Business Leaders for Michigan, which represents the state’s largest companies, also expressed concerns that raising corporate income taxes would strain businesses, particularly small ones, and potentially drive away new investments.

On the other hand, groups representing public transit systems in Michigan, such as the Michigan Public Transit Association, have expressed support for the plan, particularly the $250 million dedicated to public transit projects. Many bus systems across the state have faced funding shortfalls due to declining state support, making the proposal a much-needed boost for transit services.

Meanwhile, the Michigan Infrastructure & Transportation Association, which represents road construction firms, welcomed the proposal and called on state lawmakers to find a compromise solution that addresses Michigan’s long-term infrastructure needs.

As the debate continues, the fate of Whitmer’s plan will largely depend on negotiations with the Republican-led Michigan Legislature, which has proposed alternatives that do not involve new taxes. Speaker of the House Matt Hall (R-Richland Township) has indicated that he would support raising the corporate income tax if part of a broader restructuring of economic incentives to benefit the state’s road repair efforts.

Governor Whitmer’s infrastructure plan has thus become a focal point of the state’s ongoing struggle to address its road repair crisis, balancing the need for new revenue with the potential impacts on Michigan’s businesses and residents.