Michigan’s Transportation Funding Act PA 51 of 1951 Michigan’s Transportation Funding Act

Thanks & Credit House Fiscal Agency (HFA) Senior Analyst William Hamilton Author of “Act 51 Primer, A Guide to 1951 Public Act 51 and Michigan Transportation Funding” “Act 51 Primer” available on internet: http://www.house.mi.gov/hfa/PDFs/act51.pdf Full Act available on internet: http://www.michiganlegislature.org

What is PA 51 of 1951 (Act 51) Governs appropriations for Michigan’s transportation programs Directs state restricted revenue: Motor Fuel Taxes (19-cent per gallon gas tax and 15-cent per gallon diesel tax) Vehicle Registration Taxes Why restricted Motor Fuel taxes and vehicle registration taxes are constitutionally restricted to transportation purposes “after payment of necessary collection expenses” Article IX, Section 9, Michigan Constitution of 1963

PA 51 “Funds” Michigan Transportation Fund (MTF) The main collection and distribution fund for transportation revenue. State Trunkline Fund (STF) For construction/preservation of state trunkline roads, bridges, and MDOT operations. Comprehensive Transportation Fund (CTF) For public transportation agencies and operations (buses, ferries, aeronautics, AMTRAK). Local Road Agencies Local road/street programs for 83 county road commissions and 533 cities and villages

Other PA 51 Items Directs how STF and CTF funds are spent How much operating subsidy is available for transit agencies Internal Formulas for local road agencies How much can we spend on major roads vs. local roads Allocates federal highway funds between MDOT and local road agencies Requires 75% of federal highway funds to be allocated to MDOT and 25% to local road agencies Reporting and compliance requirements for MDOT and local road agencies

Historical Transportation Appropriation Levels

Transportation Revenues (FY 06-07)

Transportation Budget (FY 06-07)

Transportation Share of State Budget $3.4 Billion appropriated for state transportation programs Represents approximately 8% of the $42.4 billion total state budget There is no state General Fund (GF/GP) revenue in the transportation budget

Michigan Transportation Fund (MTF) Created in Section 10 of PA 51 90% of state generated transportation revenue is first credited to the MTF “Off the top” deductions

“Off the Top” Deductions $3 million for Rail Grade Crossing program $3 million for Local Bridge Fund debt service $.03 of gas tax for MDOT, county road commissions, cities and villages (approx. $150 million) ½ cent of gas tax for state bridges ½ cent of gas tax for Local Bridge Fund

“Off the Top” Deductions (cont.) $43 million for STF debt service 10% for CTF $5 million for Local Bridge Fund $36.775 million for Transportation Economic Development Fund (TEDF) $3.5 million for TEDF Category A grants (targeted industries) $33 million for Local Program Fund (64.2% to counties; 35.8% to cities/villages)

“Off the Top Deductions” Funds to cover the “Cost of Collection” for gas tax, diesel tax, vehicle registrations, etc Up to $20 million for Secretary of State Unlimited amount for Department of Treasury $7.25 million for FY ‘08 Unlimited amount for Department of Environmental Quality $1.24 million for FY ‘08 Unlimited amount for Legislative Auditor General $204,000 for FY ’08 AFTER ALL OF THAT: 39.1% to MDOT; 39.1% to counties road commissions; 21.8% to cities/villages

State Transportation Fund (STF) Supports MDOT administration, state trunklines, and bridges Covers 9,696 miles of roads—8% of total road miles in Michigan Carries 51% of traffic Requires 90% of STF funds are expended on preservation of the road system Requires five-year warranties on state trunkline construction projects when possible Limits MDOT administrative expense to 10% of STF funds received

County Road Commissions Receive 39.1% of MTF balance (approximately $600 million after deductions) Divided among the 83 counties based on formula (based on combination of miles owned, population, and amount vehicle registrations) Responsible for 88,961 miles of roads—74% of total road miles in Michigan Carries 31% of state’s traffic Supports county primary roads and county local roads

City & Village Roads Receive 21.8% of MTF balance (after deductions— approximately $350 million) Divided among 533 cities/villages based on formula (based on combination of population and road miles) Cities and villages are responsible for 20,914 road miles (17% of Michigan’s roads) Carries 18% of traffic

Major Roads/Local Roads & Asset Management Two types of roads with our units: Major Roads and Local Roads Initial designations were made by cities with approval by MDOT—in 1951 Streets may be moved from Major to Local by council and approval of MDOT 75% of what you receive must be used on Major Roads. You may transfer 50% of the Major Road funds to the local system if you have adopted an ASSET MANAGEMENT PROGRAM.

(entire state system and 23,000 of local roads) Asset Management Was a recommendation of the Act 51 Transportation Funding Study Committee Involves the following components: Identification of performance goals—such as pavement condition Inventory of assets—such as roads and bridges Recording measurable condition assessment—such as pavement condition—in relation to goals Performance modeling—such as forecast of pavement deterioration Analysis of alternatives—which is most cost effective to repair or replace A statewide system is being implemented for the federal-aid eligible system (entire state system and 23,000 of local roads) Important to know because once city/village has adopted an Asset Management system, you can transfer more Major/Local funds between the two systems

Comprehensive Transportation Fund (CTF) Supports mass transit operations throughout the state (bus, train, airport, ferry) Allows 50% match for urban system operations (population of 100,000 +) Allows 60% match for non-urban system operations (population of less than 100,000) 10% must support intercity passenger/freight $3.6 million support “specialized services” (elderly and disabled) $8 million support Local Bus Capital matching support (used to match federal grants). MDOT is required to pay 66 2/3% of non-federal share AFTER ALL OF THAT: the balance remaining, if greater than $50 million, shall go towards Local Bus Capital matching grants

To contact Dave Worthams email dworthams@mml.org or call 517-908-0303 Questions? To contact Dave Worthams email dworthams@mml.org or call 517-908-0303