 
2015 Michigan Proposal 1, also known as the Michigan Sales Tax Increase for Transportation Amendment, was a referendum held on May 5, 2015, concerning a legislatively-referred ballot measure. The measure's approval would have caused one constitutional amendment and 10 statutes to go into effect. It is estimated that Proposal 1 would raise state revenues from sales and use taxes by $1.427 billion, fuel taxes by $463 million, truck registration fees by $50 million, and vehicle registration fees by $10.1 million in the first year. If approved, the proposal was estimated by the Associated Press to result in an average tax increase of $545 per household in 2016.
The proposal was defeated in an historic landslide, receiving support from only 20% of voters.
Background.
Proposal 1, consisting of House Joint Resolution UU of 2014 and associated bills, was passed on the last day of the 97th Legislature of Michigan, December 19, 2014. The legislation was created as a solution to a legislative impasse on road funding, with the state House and Senate unable to agree on legislation to create new funding for Michigan roads. Both the House- and Senate-approved plans would have allocated an additional approximately $1.2 billion annually for road and bridge maintenance. The House-approved plan would have allocated this money by cutting spending increases in other areas, including schools. The Senate-approved plan would have raised the money through higher fuel taxes.
The two chambers unable to compromise, and both plans were discarded in favor of Proposal 1. House Joint Resolution UU was passed with the requisite supermajority vote in either chamber, and ten additional bills were passed and signed into law containing enacting clauses that stipulate they only take effect if HJR UU is adopted by voters.
Contents.
Proposal 1 consists of an amendment to the Constitution of Michigan, House Joint Resolution UU of 2014. Separately from the constitutional amendment, Public Acts 467 through 476 of 2014, signed into law by Governor Rick Snyder in January 2015, contain enacting sections that specify they do not take effect "unless House Joint Resolution UU of the 97th Legislature becomes a part of the state constitution of 1963 as provided in section 1 of article XII of the state constitution of 1963."
The language of the proposal that appears on the ballot describes some aspects of these ten additional laws, acknowledging that giving effect to these ten laws is a major part of the proposal.
Ballot title.
Per Michigan law, Michigan Bureau of Elections Director Chris Thomas wrote the ballot title for Proposal 1. The language was approved 3–1 by the Board of State Canvassers; the dissenting voter was Norman Shinkle, a Republican-appointed member of the Board, who noted, "This is a very complex proposal based on interplay of changing the constitution and the laws of Michigan".
The proposal appeared on ballots as follows:
 ;templatestyles src="Template:Blockquote/styles.css" / ;A proposal to amend the State Constitution to increase the sales/use tax from 6% to 7% to replace and supplement reduced revenue to the School Aid Fund and local units of government caused by the elimination of the sales/use tax on gasoline and diesel fuel for vehicles operating on public roads, and to give effect to laws that provide additional money for roads and other transportation purposes by increasing the gas tax and vehicle registration fees.
The proposed constitutional amendment would:
Policies that would be enacted.
Sales tax increase.
The largest tax increase in the proposal is the raising of Michigan's state sales tax from 6% to 7%. An additional law, Public Act 553, passed in December 2014 and taking effect in October 2015, will require certain Internet retailers, such as Amazon.com, to collect Michigan's sales tax at the point of purchase. The constitutional amendment would allow for the sales tax increase, and Public Act 474, put into effect by the proposal, would immediately raise the sales tax to the newly authorized rate.
Fuel tax modification and increase.
The proposal would exempt gasoline and diesel fuel used to operate a motor vehicle from the state sales tax and instead increase in the wholesale fuel tax.
The Mackinac Center for Public Policy reports, "The state currently imposes both sales tax and a per-gallon excise tax on motor fuel. This excise tax along with vehicle license and registration fees are the primary source of revenue for the state's road maintenance budget. Under the measure, sales tax would no longer be imposed on fuel and the motor fuel tax would be replaced with a new wholesale tax levied at higher rates than currently. At a listed price of $2 per gallon, the state is currently collecting 29 cents per gallon in sales and excise taxes on gasoline. This proposal would increase those collections to 41.7 cents per gallon."
Additionally, the retail sales tax on gasoline is expressly eliminated only for vehicles "driving on Michigan roads." It is not eliminated for off-road vehicles, including boats, agricultural machines, ATVs, snowmobiles, and other gasoline-powered vehicles and tools.
Vehicle registration fee increase.
Vehicle registration fees would no longer depreciate with the value of the vehicle, raising fees overall. Additionally, because vehicle registration fees are no longer "ad valorem" (based on value) they would no longer qualify as a federal tax line-item deduction. The Anderson Economic Group estimated Michigan residents would pay an additional $102 million in federal taxes caused by this change.
State Rep. Mike McCready, who sponsored the vehicle registration fee bill, said that legislative leaders knew that change would eliminate the federal deductions. McCready said that the legislature chose to eliminate the depreciation discounts for new vehicles, rather than increase the tax rate for all vehicles, because the legislature "felt this would be the least painful [option]".
Funding for roads.
Michigan's proposed fiscal year 2015–16 budget contains cuts in discretionary funding for roads from $285 million the previous year and $451 million in 2014. The proposed amount for fiscal year 2015–16 is $113 million, according to the House Fiscal Agency.
Governor Snyder described the continuing cuts as intentional, saying "that's why this needs to get approved."
Proposal 1 would increase spending on roads by approximately $400 million in the first year, $800 million in the second, and $1.2 billion in subsequent years. Under Public Act 468 (part of the proposal) for the 2015–16 fiscal year, $400 million of $1.2 billion raised from increasing fuel taxes would go to the Michigan Transportation Fund (MTF); the remaining money would be used to pay down a portion of the state's debt from previous road construction projects. For the 2016–17 fiscal year, $800 million of the $1.2 billion would go to the MTF, and starting in the 2017–18 fiscal year, nearly all of the projected $1.35 billion in fuel tax revenue would go to the MTF. "However, the language in the bill does not earmark a portion of the additional revenue resulting from the bill, but a portion of the total revenue generated by the Act. As a result, the language would result in a 56.6%, or $522.2 million, decline in MTF revenue available for roads."
Funding for schools and local governments.
Proposal 1 would have modified funding for schools and local governments.
Changes in School Aid Fund usage rules.
Proposal 1 would have made changes to School Aid Fund usage rules.
Earned Income Tax Credit expansion.
The Michigan Earned Income Tax Credit (MEITC) was amended in 2011, reducing the credit to eligible taxpayers from 20% of the federal Earned Income Credit to 6%. Proposal 1 would give effect to a law that increases that credit back to 20% of the federal amount. 
The Institute on Taxation and Economic Policy estimated that if Proposal 1 passes, the average recipient of the MEITC who earns less than $20,000 will see a net tax break of $24. The Mackinac Center for Public Policy estimated that, if passed, Proposal 1 would result in typical Michigan families seeing an increase of $500 in taxes per year. Taxpayers who qualify for the MEITC would have, on average, a net tax break of $69; however, some MEITC recipients might see a tax increase.
New competitive bidding rules.
Public Act 472, an act modifying and consolidating public bidding rules for road projects, was dependent on this proposal for implementation.
Warranty expansion and affirmative action rules.
Public Act 473, which takes effect if and only if Proposal 1 is adopted by voters, modifies rules for road contraction, including new affirmative action rules and warranty requirements.
"MichiganVotes.org" summarized the bill as "to expand to local road agencies a requirement to warranties from contractors for road construction and preservation projects valued at more than $1 million. Under current law the warranty requirement only applies to the state Department of Transportation. Also, to require the Department of Transportation to give extra assistance (possibly including grants and loans) to "disadvantaged" businesses that bid on state funded road projects; and to take other steps to steer more state-funded road work to such firms, including annual consultations with certain ethnic- and race-based organizations."
Policies subject to change.
Proposal 1 consists of a constitutional amendment that could not be modified without a subsequent vote of the people of Michigan, but the ten laws that take effect if Proposal 1 passes, Public Acts 467 through 476 of 2014, containing most of the significant policy changes, are ordinary laws that are written as to only take effect if the Proposal 1 is adopted. These laws could be modified by the legislature at any time, before or after May 5, 2015, and before or after they are scheduled to take effect.
Public polling.
A late-March statewide poll by Lansing-based EPIC-MRA found that 70 percent of voters were opposed to Proposal 1, with only 21 percent in favor. The remaining 9 percent of voters were undecided.
Arguments.
Support.
There are three principal arguments advanced by "Safe Roads Yes!", the ballot committee supporting the proposal: Proposal 1 (1) guarantees that all taxes on gasoline are allocated to transportation; (2) guarantees that all money in the School Aid Fund goes toward K-12 education; and (3) extends pavement warranties so that road builders pay for repairs to poorly constructed roads.
The proposal was to remove the sales tax from Michigan fuel sales. This was claimed to remedy the anomalous perverse situation where "Michigan charges some of the highest taxes on fuel in the nation, but still has among the lowest per-lane-mile spending on roads."
Nolan Finley, editor of "The Detroit News" (which also endorsed Proposal 1), wrote in support, "There is no Plan B". Finley argued that the option of cutting spending from other areas of the budget will not work, as "Republicans aren't going to make substantial cuts to prison spending, Democrats aren't going to hack welfare spending, and neither party is going to touch school spending." Finley noted that, in his opinion, the best course of action would be to raise the money through an increased fuel tax; however, the legislature had been unable to pass such a bill last session and would likely be unable to do so now. Finley concluded by saying that if the proposal fails, revenue increases will be off the table, making Proposal 1 the only option. "So the real message to voters should be this: Hold your noses and vote for Prop 1, or keep driving on what may be the deadliest roads in America. Guaranteed."
MLive Media Group, in its editorial endorsement of Proposal 1, argued that has been under investing in infrastructure, schools, and municipalities for too long, and that the only way to rectify this is through a tax increase. The editorial argued that "[t]here is no viable alternative." The editorial also contested claims by opposition groups, saying, "Schools and municipalities are not 'special interests,' as Proposal 1 opponents cynically call them."
Opposition.
Opponents of Proposal 1 argue that tax increases are unnecessary to fix the roads. They use as an example an alternative proposal passed by the Michigan House that would not raise taxes in December 2014, supported by then-speaker Jase Bolger.
In an op-ed published by MLive, Rep. Tom McMillin made three arguments to show that tax increases were not necessary: (1) Noting that the state's budget increased close to $5 billion from 2012 to 2015 and that the tax increase only raises $2 billion annually, the new taxes would only offset new spending, which has not gone to roads; (2) in 2014, the state House passed a bill "to fully fix and fund roads without any tax increases, by simply prioritizing new spending", but the governor blocked the legislation; and (3) "[r]oads are an ordinary budget item in