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

$2,22

5.00

$2,18

4.10

$2,14

0.60

$2,16

3.50

$2,11

9.70

$2,11

0.30

$1,16

9.30

$1,19

7.60

$1,13

2.70

$941

.80

$988

.00

$985

.30

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

FY 02 FY 03 FY 04 FY 05 FY 06 FY 07

Mill

ions

of D

olla

rs

FederalState Restricted

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 service10% 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 bridgesCovers 9,696 miles of roads—8% of total road miles in MichiganCarries 51% of trafficRequires 90% of STF funds are expended on preservation of the road systemRequires five-year warranties on state trunkline construction projects when possibleLimits 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 MichiganCarries 31% of state’s trafficSupports 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 RoadsInitial designations were made by cities with approval by MDOT—in 1951Streets may be moved from Major to Local by council and approval of MDOT75% 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.

Asset Management

Was a recommendation of the Act 51 Transportation Funding Study CommitteeInvolves 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 replaceA 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

Questions?

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