On May 5, 2015, Michigan voters will be asked to approve or reject Proposal 1. The proposed amendment would change the state constitution to increase the maximum allowable sales tax rate from 6 to 7 percent, exempt fuel purchases from sales and use taxes, modify the allowed use of School Aid Fund revenues, and earmark a portion of use tax revenue for the SAF.[1]

Approval of this constitutional amendment would also trigger a series of new laws. These laws would increase the sales and use tax rates to 7 percent, create a new and higher wholesale fuel tax and earmark new revenues to road construction, increase vehicle registration fees, boost the earned income tax credit, increase public school funding and create new rules for the Michigan Department of Transportation.[2]

The impetus for Proposal 1 comes from cost projections for maintaining the condition of Michigan roads. Gov. Rick Snyder advocated for more spending on road repair and maintenance, originally calling for between $1 billion and $1.4 billion in funding.[3] Increasing the sales and use taxes rate from 6 to 7 percent would raise $1.427 billion in state revenue.[4] Altogether, Proposal 1 would increase state taxes and spending by about $2 billion in its first year.[5]