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PA 51 of 1951 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”

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PA 51 of 1951 Michigan’s Transportation Funding Act

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

  2. 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

  3. 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

  4. 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

  5. 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

  6. Historical Transportation Appropriation Levels

  7. Transportation Revenues (FY 06-07)

  8. Transportation Budget (FY 06-07)

  9. 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

  10. 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

  11. “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

  12. “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)

  13. “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

  14. 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

  15. 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

  16. 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

  17. 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.

  18. 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

  19. 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

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

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