Category Archives: Road funding

Significant Changes Coming to Rural Task Force Program

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The Michigan Department of Transportation (MDOT) , in conjunction with the Rural Task Force (RTF) Oversight Board is please to announce it has achieved significant milestones in improving the RTF Program in a way that fulfills federal oversight rules and better meets the needs of rural programs.

In early 2016, the RTF Oversight Board will begin rolling out materials and guidance documents to bring more transparency and equity to the way federal funds flow through Michigan’s Rural Task Forces and Regional Planning agencies.

The Oversight Board has come to a consensus on a better path forward to improve how local federal obligation dollars are distributed, allocated, and obligated in the RTF Process.

Please click on the following link for key statements that summarize the new milestones. MDOT RTF Milestone Letter

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.

Act 51 Compliance Requirements Due September 30th

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Act 51 compliance requirements are due September 30th as a result of changes that were made to the compliance requirements of Public Act 51 of 1951, Section 18j, MCL 247.668j related to funding from the Michigan Department of Transportation for roadways within local units of government.

To comply, by September 30, 2015, a certificate regarding the compensation plans for your local transportation employees must be completed, signed, submitted to the State Department of Transportation and posted on your municipal website. MDOT has summarized the compliance requirements in FAQ form.

If this form is not submitted by September 30th MDOT may withhold Act 51 funding for non-compliance.

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.

After Serious Negotiations It Is Back To The Drawing Board On Transportation Funding

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Legislators spent the majority of the week once again trying to find a way to invest more money in Michigan’s roads. Talks began with the most serious negotiations of the summer and at one point there was some belief that a deal was close. At the end of the day though a final compromise was unable to be reached and the Governor and legislative leaders are back to the drawing board.

The potential deal was a plan based around increasing road funding by $1.2 billion, with $600 million coming from new revenue and $600 coming from existing revenue. The new revenue would come from a combination of gas taxes and registration fee increases. The $600 million in cuts to existing revenue remained undefined and was one of the major sticking points with many legislators.

Talks have already begun on finding a way to solve this problem but further action will not take place until after Labor Day at the earliest. The League has continued to voice our concerns over the use of a significant amount of unidentified existing revenue, the need to invest in transit, and that any solution should not put an unnecessary amount of new reporting requirements on our members

The League will be working hard to ensure our voice is heard as we move closer to a deal. We will continue to update you on any new details and how you can engage members of the Legislature in the coming weeks.

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.

League Highlights Potential Negative Impact of Using General Fund Revenue for Roads

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Although the Legislature made little progress this week in finding a solution to fix Michigan’s infrastructure needs, the League was very active in expressing our opposition to significant cuts to the General Fund.

On Monday we delivered a letter signed by the League and eight other organizations (Michigan Fraternal Order of Police, Michigan Association of Counties, Michigan Association of Police Organizations, Michigan League for Public Policy, Michigan Professional Fire Fighters Union, Michigan Townships Association, Police Officers Association of Michigan and Presidents Council, State Universities of Michigan) to all 110 members of the House expressing our serious concerns with using existing General Fund resources to improve Michigan’s infrastructure. A copy of the letter can be found at the following link. Final GF Concern Letter to Legislators

In addition to the letter the League requested much respected non-partisan former House Fiscal Agency Director Mitch Bean to look at the implications of SB 414.

Key findings in Bean’s report:

  • The state’s General Fund has declined 1.8 percent since FY 2001, and adjusted for inflation has declined 23 percent. No state in the nation has cut its budget more than Michigan over that period.
  • The state already faces revenue pressure from several tax changes scheduled to take effect in FY 2017-18, when SB 414 would take full effect.
  • Additional general fund spending pressures are also expected, given federal policy changes that will require more state support for basic human services.
  • If SB 414, as passed by the Senate becomes law, the likely impact on the FY 2017-18 General Fund (GF/GP) budget would be $450 million to $550 million in GF/GP budget cuts.
  • The state would have to cut between 11 percent and 13 percent from each department line item if they were able to reduce health and human services, and corrections spending, the two largest items in the GF budget, by a combined $100 million.

The report and a memo from the League was provided to every Legislator, the Governor, and the Capital Press Core. A copy of the memo and report can be found at the following link. Report for Legislators

The League will continue to work 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 weeks.

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

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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

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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

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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.

House Road Funding Plan Sent to the Senate

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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 that 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, and 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 and one of the key factors for 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 and these bills do not do that. We have offered testimony on multiple occasions explaining or 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.

House Road Funding Plan Passed Out of Roads and Ecomomic Development Committee

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The House road funding plan that would that would rely primarily on future growth, cuts to MEDC, and the elimination of the earned income tax, to raise $1 billion for road and bridge repairs was voted out of committee today. With the exception of one bill, the 12 bill package was voted out on a party-line vote with the five Republican committee members voting yes.

The proposed package of bills has less than $50 million in new revenue. It neglects to make a much need 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 and one of the key factors for 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. We have offered testimony on multiple occasions explaining or dissatisfaction with this proposal. Our advocacy efforts will continue to focus on a solution that included new revenue and makes much needed investments in public transit.

It is anticipated that the full House will vote on these bills out next week.

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.

Committee Hearings Continue on House Road Funding Plan

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The Roads and Economic Development committee held a second day of hearings on the House road funding plan. The committee first took testimony on HB 4615, HB 4614, and HB 4616 which would increase the diesel fuel tax to 19 cents per gallon on October 1, 2015 making it equal to the tax paid on gasoline, and beginning in 2016 would adjust the tax for inflation or by 5 percent, whichever is less. The changes would generate $45 million in new revenue. Next the committee heard testimony on HB 4612 would raise registration fees on hybrid and electric vehicle generating about $5 million in new revenue.

These four bills are the only bills that generate new revenue for roads. The League has continually stressed the point that our current infrastructure needs cannot be solved without a significant and dedicated source of new revenue and continue our opposition to any plan that does not address this concern.

Finally the committee took testimony on, and the League testified in opposition to, HB 4607 and HB 4608. These two bills would cut MEDC funding by $145 million and redistribute that revenue to roads. This redistribution of revenue would have a potentially devastating effect on the Community Revitalization Program, Public Spaces and Community Places program, and many other MEDC grant opportunities our members take advantage of. Additionally the funds that would be diverted to roads would bypass any additional funding for public transit further continuing the trend of not investing adequate resources to improver or entire transportation network.

Next week the committee will hold it final day of testimony and will discuss bills that will dedicate General Fund dollars to roads.

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.