Senate Passes Road Plan with $700 million in Unspecified General Fund Cuts

Last night the Senate voted out a road funding plan that could ultimately raise $1.5 billion for roads, with two of the main pieces of legislation in the plan coming to a tie on the chamber floor.

The plan generates roughly $822 million by increasing the gas tax 15 cents and $700 million from unspecified General Fund budget cuts.

Eight bills — SB 0414, HB 4610, HB 4611, HB 4612, HB 4613, HB 4614, HB 4615 and HB 4616 — were passed through the Senate, but two of the main pieces of legislation were only moved after Lt. Gov. Brian CALLEY broke the tie.

Under HB 4615, the gas tax would go up 19 cents to 23 cents on Oct. 1, 2015; to 27 cents on Jan. 1, 2016, and 34 cents on Jan. 1, 2017, raising $475 million more for the roads in Fiscal Year (FY) 2016, $733 million in FY 2017 and $822.1 million in FY 2018, according the Senate Fiscal Agency (SFA).

The also also creates a lock box directing seven cents of the 15-cent gas tax increase to a fund controlled by the Department of Treasury that could only be spent after approval is given by joint resolutions of the House and Senate.

Under SB 414, a $350 million General Fund allocation would be made toward roads in Fiscal Year (FY) 2017 and a $700 million special roads allocation that would take place going forward until FY 2033.

The bill also includes a mechanism that would roll back the state’s income tax if General Fund revenue exceeds the rate of inflation. Every .1 percent that is rolled back from the state’s 4.25 percent income tax would equate to an additional $230 million reduction in the the state’s General Fund.

HB 4613 would require warranties, where possible, on all road projects over one million dollars. Additionally, this bill contain 23 new reporting requirements that local units of government must provide to MDOT.

The bottom line is that this plan does not provide a long-term sustainable solution to address Michigan’s deteriorating infrastructure. Additional earmarks from the General Fund and only allowing the General Fund to grow by inflation could severely affect the ability of the state to prioritize investment in communities that desperately need it. It could result in future cuts to revenue sharing, K-12, higher education, community colleges, economic development, PILT, fire protection grants, or state police.

The League will be working hard to ensure our voice is heard on the potential long-term negative impacts this proposal could have on our communities. We will continue to update you on the advancement of this proposal and how you can engage members of the Legislature in the coming days.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

 

Senate Republican’s Release Road Funding Plan, Vote It Out of Committee

A fire truck makes an emergency run over crumbling roads in Macomb County.

A fire truck makes an emergency run over crumbling roads in Macomb County.

Late yesterday afternoon the Senate Republican’s released their road funding plan and immediately voted it out of committee on a party line vote. The plan consists of a mix of new revenue and rededicating General Fund money for a total of approximately $1.5 billion in funding for roads and bridges when fully implemented.

Beginning October 1, 2015, this plan would increase the gas tax by 5 cents. It would increase an additional 5 cents on January 1, 2016 and January 1, 2017, for a total of a 15 cent increase. Tax rates on diesel would be adjusted so they are equal to the tax paid on gas by the end of that three year period. Beginning in 2018 gas and diesel taxes would be tied to inflation. This will generate roughly $820 million in new road dollars that will flow through the full Act 51 funding formula, providing an increase to the Comprehensive Transportation Fund which supports public transportation, rail, and ports. Beginning in 2033 the gas tax would be eliminated.

The plan earmarks $350 million of existing income tax revenue in 2016 and $700 million each year from 2017 to 2032 solely for roads and bridges. These redirected dollars would circumvent the full Act 51 formula, bypassing the Comprehensive Transportation Fund (CTF).

State General Fund spending would be capped at current spending levels and only allowed to grow by the rate of inflation. Any growth over inflation will result in a reduction to the income tax rate by the same amount. There is no identified floor on the rollback so hypothetically income taxes could be rolled all the way back to zero.

Similar to the House plan this proposal would eliminate the Earned Income Tax Credit, require competitive bidding on all MDOT and local road projects over $100,000, require MDOT and local road agencies to secure warranties for projects over $1 million, and allow townships contributing greater than 50% to a road project over $50,000 to require competitive bidding. MDOT must also create a 50 Year Roads Task Force where their goal will be find a way to build roads that last at least 50 years and to be able to build them for half the cost.

The bottom line is that this plan does not provide a long-term sustainable solution to address Michigan’s deteriorating infrastructure. Additional earmarks from the General Fund and only allowing the General Fund to grow by inflation could severely affect the ability of the state to prioritize investment in communities that desperately need it. It could result in future cuts to revenue sharing, K-12, higher education, community colleges, economic development, PILT, fire protection grants, or state police.

We would encourage all of our members to reach out to their State Senator and explain that we are thankful that this proposal has new revenue included but this proposal will severely limit the flexibility of the state’s General Fund. The lack of flexibility could have a long-term negative affect on communities. Please ask that they do not pass this legislation this without significant changes that will protect the state’s ability to invest much needed resources into communities.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

 

Governor Signs Budget with $400 Million in General Fund Spending on Roads

The governor recently signed budget that included an additional $400 million in General Fund spending for roads and bridges. Of the $400 million $160 million will be used to match all available federal funds and the remaining $240 million will be distributed to MDOT, County Road Commissions, and Cities and Villages.

This additional revenue will result in additional $56.7 million for local roads in cities and villages throughout the state. For a breakdown of what each individual community will receive please click the following link. Act 51 breakdown for cities and villages

Although this additional money will be helpful, it does not represent a long term solution. The League continues to advocate for a long-term sustainable solution that will fund all aspects of out transportation network.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

2015 Metro Act Distribution Payments

On May 29, 2015, the Authority Council of the new Local Community Stabilization Authority (LCSA) met and approved the distribution of the 2015 annual payments to cities, villages, and townships under the Metropolitan Extension Telecommunications Rights-of-Way Oversight Act (METRO Act), 2002 PA 48. The following link lists the amounts payable to each city, village, and township this year. 2015 Metro Payments to Cities Villages

The total distribution of $18,602,739.39 for 2015 decreased by 10.8% from the $20,871,269.12 distributed in 2014. The decrease can largely be attributed to the reduction in telecommunication facilities reported by telecommunication providers, particularly AT&T Michigan, the state’s largest telecommunication provider.

In 2015, most cities and villages will receive about 9% less than in 2014. The majority of townships will also see a decrease, but the percentage varies because of the statutory formula used in determining maintenance fee payments to townships.

As you may be aware, because the functions and responsibilities of the former Metro Authority were transferred to the LCSA, municipalities will not receive METRO Act payments via State of Michigan warrants or electronic transfer. For those municipalities that did not make arrangement with the LCSA for electronic transfer, METRO Act payment checks will be processed by Comerica Bank on behalf of the LCSA with a notation that the payment is a METRO Act payment. Communities should expect to receive these payments in July.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

DEQ to Host Workshops on Lake and Wetland Protection Tools for Local Governments

Michigan has 11,000 inland lakes and over 1,850 units of government who share a role in keeping those lakes clean for future generations. Four workshops will be held in Michigan during the summer of 2015 to help local officials and concerned citizens understand the benefits of inland lakes to communities, the regulations that govern them, and the opportunities for enhancing protection at the local level.

Workshop Dates and Locations:
• July 21: Franklin Twp. Hall, 3922 Monroe Rd. (M-50), Tipton (Lenawee County)
• August 3: Kensington Metropark Farm Center, 2128 W. Buno Rd., Milford (Oakland County)
• August 6: North Central Michigan College Library Conference Center, 1515 Howard St., Petoskey (Emmet County)
• August 10: Van Buren Conference Center, 490 S. Paw Paw St., Lawrence (Van Buren County)

Each workshop will be held from 9 a.m. until 4 p.m. and lunch will be provided. The fee is $20 per person and registration is required 10 days prior to each workshop. Topics will include: the importance of inland lakes and wetlands, what you can do at the local level, natural features setbacks, existing legal framework, and how to get started in your community.

For more information or to register, visit www.VanBurenCD.org or contact Erin Fuller at 269-657-4030 x112 or erin.fuller@mi.nacdnet.net.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

MDOT Local Agency Programs Planning Guide and Federal Obligation Authority

MDOT has posted the FY 2016 Planning Guide on their Local Agencies web page. Please click here to view.

MDOT  Local Agency Programs (LAP) has also posyed an update on the federal obligation authority making its way through the FHWA and MDOT funding formulas. The final funding amounts will not be announced for 3- 4 weeks, the new obligational authority will result in a limited amount of new project obligations. It is anticipated that the current backlog of projects LAP is holding would exhaust this new obligational authority. Agency can use the “Advanced Construct” funding method, however your agency could be liable for the federal share if Congress does not appropriate additional funding for FY 2015. To view the update please click here.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

House Commerce Committee Passes Bill Preempting Local Control of Transportation Network Companies

HB 4637 would provide statewide regulations for a Transportation Network Company (TNC). The most recognizable TNC operating in Michigan today is Uber. This bill would preempt local control of a TNC but it does allow for locals to enforce provisions of the statewide regulation. A few communities in Michigan have already negotiated contracts with and regulate TNCs. This would make those contracts null and void.

The statewide regulation would provide uniform standards for insurance, vehicle safety inspections, background checks, and driving records. Although there was opposition from many groups the bill was passed out of committee. The League is opposed to this bill and has testified in opposition.

We anticipate this bill seeing floor action before the Legislature breaks for the summer at the end of this week. On the other side of the Capitol, the Senate has been working on legislation, SB 184, that would continue to protect local control and allow communities to regulate TNCs. The League is support of the Senate bill and hopes to fine a resolution to this issue in the near future.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

Bill Allows Locals First Crack at Surplus Snow Removal Equipment

HB 4368 would require the Michigan Department of Transportation to make surplus snow removal equipment available for sale to local units of government before otherwise disposing of it.

Under current law and practice, excess or surplus MDOT equipment, including snow removal equipment, is sold through DTMB public auction. Local agencies are currently eligible to bid for equipment at auction but under this legislation they will have the first opportunity to bid. The League supports this legislation.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

HHS Issues Final Recommendation for Community Water Fluoridation

The Michigan Department of Health and Human Services (MDHHS) oral health program is pleased to announce that the U.S. Department of Health and Human Services recently released the final Public Health Service (PHS) recommendation for the optimal fluoride level in drinking water to prevent tooth decay.

The new recommendation is for a single level of 0.7 milligrams of fluoride per liter of water. It updates and replaces the previous recommended range (0.7 to 1.2 milligrams per liter) issued in 1962. The Office of Drinking Water and Municipal Assistance in the Michigan Department of Environmental Quality (DEQ) will continue to advise and assist community water systems to achieve this new recommendation.

In Michigan, the majority of the Public Water Systems adjust fluoride levels to be in line with this updated PHS community water fluoridation recommendation. Fluoridation of public water supplies in the United States began close to 70 years ago in Grand Rapids, Michigan. Currently, more than seven million Michigan residents have access to community water fluoridation to improve oral health.

For more information please click here.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

House Road Funding Plan Sent to the Senate

With almost entirely Republican support, a twelve bill package that represents Speaker Cotter’s transportation plan was passed out of the House today and sent to the Senate. The plan would use existing revenue and prioritize future dollars to provide an additional $1.1 billion in funding for roads and bridges and was broken down into the following five categories.

$792 million from the General Fund
$135 million from Reprioritizing Restricted Funds
$117 million from Tax Fairness
$38 Million in New Revenue
Reforms and Efficiencies

General Fund: The $792 million the Speaker proposed will come from prioritizing general fund spending and assumes cuts can be avoided due to expected future growth in revenues. This is phased in over 4 years with $442 million being dedicated in FY 16, $492 million in FY 17, $617 million in FY 18, and $792 million in FY 19. After FY 19 the number will grow by the rate of inflation or 5%, whichever is less.

Reprioritizing Restricted Funds: Of the $135 million, $75 million will come from tobacco settlement dollars currently in the 21st Century Jobs Fund, $60 million from the states tribal gaming compact. These bills gut MEDC funding and potentially many of the programs our members have benefited from.

Tax Fairness: The House eliminated the Earned Income Tax Credit resulting in a $117 million for roads.

New Revenue: $38 million will come from diesel parody (raises tax on diesel to 19 cents and ties it to inflation) and increased fees on electric and hybrid vehicles ($30 increase for hybrids and $100 increase for electric).

Reforms and Efficiencies: The House-passed bills will require competitive bidding on all MDOT and local road projects over $100,000, require MDOT and local road agencies to secure warranties for projects over $2 million, and allow townships contributing greater than 50% to a road project over $50,000 to require competitive bidding.

Other highlights: The current gas tax will remain at 19 cents but will be tied to inflation. All of the new money will be sent to MDOT, counties, cities and villages resulting in no increase for the comprehensive transportation fund.

The proposed package of bills has less than $40 million in new revenue. It neglects to make a much needed investment in transit and jeopardizes economic development funding many of our communities benefit from. This plan also impacts the long-term certainty our communities need to plan, which is one of the key factors to our opposition.

The League firmly believes we must find a sustainable long-term solution to the problem that includes new revenue that is dedicated to the entire transportation system. These bills do not do that. We have offered testimony on multiple occasions explaining our dissatisfaction with this proposal. Our advocacy efforts will continue to focus on a solution that includes new revenue and makes much needed investments in public transit.

We look forward to working with the Senate and are hopeful that this package can be improved significantly.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.