LANSING – Would you be willing to pay a new 50-cent tax per delivery – think Uber Eats dropping off your pizza or an Amazon van with your new I Love Detroit shirt – if the money was used to fix residential and neighborhood streets?

That’s an idea the Michigan Municipal League is floating to raise an estimated $275 million yearly to fix and maintain city, village and township roads.

Although there is no Neighborhood Roads Fund legislation yet, proponents say the tax would improve residential roads by increasing resources for local governments.

And the idea is a no-sale to retailers.

Cities, towns and villages rely on state funding for residential streets because those roads don’t qualify for federal aid.

“One thing that has become more consistent that we hear about is fixing the local roads,” said John LaMacchia II, the director of state and federal affairs at the league, which represents more than 500 cities and villages.

“When we hear that, we tend to believe people are talking about neighborhood streets. They are talking about the road right outside their door,” he said.

To generate money for the proposed Neighborhood Roads Fund, a 50-cent tax would be collected from retailers, including restaurants, on all deliveries made by motor vehicles.

Exemptions would include new businesses, wholesale transactions and retailers that had less than $500,000 in sales during the prior year.

LaMacchia said support for levying taxes to fund the transportation budget is lacking, and he expects the fee to be scrutinized.

“It’s unclear why delivery from retail would be targeted versus if I were to go pick it up,” said Vic Veda, the vice president of communications at the Michigan Retailers Association. “The road usage seems similar, and it is unclear why one would be taxed over the other.”

The association represents about 15,000 businesses.

Veda said added regulatory burdens, like fees, create administrative build-up, which especially harms small businesses with less manpower.

Brian Calley, the president of the Small Business Association of Michigan, said in a statement that while the organization supports increasing infrastructure investments, the costs should be evenly distributed.

“Those entrepreneurs already pay gas taxes on the fuel that they buy to support the roads,” Calley stated. “They also pay registration fees on the vehicles they use to make deliveries. It does not make sense to single them out.”

However, Rep. Jason Morgan, D-Ann Arbor, said the state has a $3.9 billion deficit in funding roads, bridges and infrastructure.

He said the state lacks enough resources to support roads and needs to generate new revenue.

“We’ve been doing a great job fixing our state highways and federal highways with our state and federal funds,” Morgan said, “but it doesn’t matter if I can drive down the highway if I’ve gotten a flat tire on my way there.”

Morgan is the minority vice chair on the House State and Local Transportation Appropriations Subcommittee.

He said nobody likes raising taxes, but he thinks people will save money long term.

“We will have less reliance on raising property taxes locally, and we could potentially see lower auto insurance rates or at least personal cost of our vehicles,” Morgan said.

Local governments often fund residential road repairs by upping property taxes.

The state generates revenue for the transportation budget through fuel and vehicle registration taxes and fees, according to a 2024 fiscal brief.

That revenue is shared among local road agencies, state roads and bridges, public transportation and aeronautics programs. Some 38% of transportation funds is available for local road agencies, according to the January 2025 Transportation Budget Briefing.

“I would be fine paying taxes for roads if I was actually getting better roads,” Morgan said, “but I’m not. I want better roads for my neighborhood and everyone else’s in Michigan.”

Morgan agrees with the concept of imposing a delivery fee to raise revenue.

“The idea of funding local roads and streets from a very small fee on retail deliveries makes a lot of sense as a less intrusive way of funding our local roads,” Morgan said.

He said, “I would love to see that option on the table as we look at an array of road funding options.”