CHICAGO (Reuters) - Michigan Governor Rick Snyder on Tuesday signed into law a package of bills aimed at raising $1.2 billion to fix the state's crumbling roads and bridges.
"This is a comprehensive solution," the Republican governor said after signing the seven bills.
The legislation passed by the Republican-controlled legislature raises motor fuel taxes and vehicle registration fees to gain about $600 million in new revenue.
Snyder said he is still considering the sale of bonds backed by the new revenue given low interest rates.
The legislation also siphons off up to $600 million in state income tax revenue for roads, expands the homestead property tax credit and could reduce the 4.25 percent individual income tax rate depending on certain revenue triggers, according to a legislative analysis of the bills.
After a five-year phase-in, the plan would increase transportation funds by about $1.2 billion a year. But it will also reduce state general fund revenue by about $806 million annually, the analysis said.
Moody's Investors Service this week said the legislation is a positive credit move because it will enhance coverage on the state's transportation bonds.
"Since fuel taxes and registration fees are constitutionally dedicated for transportation, these incremental revenues would likely enter the flow of funds for the bonds and be pledged to bondholders," the credit rating agency said in a report.
(Reporting by Karen Pierog; Editing by Paul Simao)