Federal road funding from the Highway Trust Fund comes primarily from the federal 18.4 cents-per-gallon gasoline tax and 24.4 cents-per-gallon diesel tax. Federal highway funds are available for projects identified as federal-aid-eligible highways.[23] Federal funds provide an 80 percent match of local or state funding for eligible projects and cannot be used for routine maintenance.[24]
Several government units, both state and local, receive money from the Michigan Transportation Fund, including the Michigan Department of Transportation, county road commissions, cities, villages and townships.
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Michigan vehicle registration fees and fuel taxes generated approximately $2.6 billion in revenue in fiscal year 2017. Approximately $24 million of this was used for administrative overhead, with the biggest component being $20 million used to operate the Secretary of State. A total of $63 million in transportation revenues went to the Economic Development Fund and the Recreation Improvement Fund. Another $154 million was spent on administrative grants, debt service and other grant programs. After these deductions, approximately $2.3 billion in revenue was distributed to MDOT, county road commissions, and cities and villages to maintain and repair roads and bridges.[42]
The Economic Development Fund was created in Act 51 to fund transportation improvements that support private investment and job creation. Its annual report cites five categories of road improvement projects eligible for assistance: for targeted industry development and redevelopment, to reduce urban traffic congestion, to create an all-season road network in rural counties, to support the development of commercial forests, and to support an all-season road network in urban areas of rural counties.[43]
Another 10 percent of the MTF is earmarked for the Comprehensive Transportation Fund. Money from that fund is used to support public transportation throughout the state. Most of this money is allocated, based on a formula, to local transit agencies. In fiscal 2018, close to $250 million was disbursed from the MTF for such purposes.[46]
The $2.3 billion remaining in the MTF after the monies described above were allocated were disbursed based on the following allocations: 39.1 percent goes to MDOT for the state trunkline fund, 39.1 percent goes to county road commissions and 21.8 percent goes to cities and villages.[47] One percent of the Act 51 distribution to county road commissions is set aside for snow removal in counties that receive more than 80 inches of snow annually.[48]
Act 51 distributes MTF funds to county road commissions based on a number of factors. How much each county receives depends on how many miles of certain types of roads it has, how many vehicles are registered there, its population and its annual snowfall.[49] Graphic 11 summarizes these factors.
The most recent allocation factors are given in the last column in Graphic 11. Each county receives $1,056,287 from the MTF plus 37 cents for every $1 residents in the county paid in vehicle registration fees. Rural areas, defined as areas outside of an incorporated municipality, receive an additional $16.88 per resident. Counties with urban roads receive $12,390 per mile for urban primary roads and $2,065 per mile for urban local roads. All counties receive $2,164 per mile for primary roads and $2,374 per mile for local roads.[51]
It is not clear whether urban counties or rural counties disproportionately benefit from how MTF funds are distributed. On one hand, urban counties have more drivers, which amounts to doing more damage to the roads. On the other hand, rural counties have a large number of roads relative to their population, and it would be more difficult to maintain these roads if MTF dollars were distributed based strictly on population.
Graphic 12 illustrates this tradeoff. Counties are grouped into urban and rural counties based on U.S. Census data. Urban counties receive, on average, almost five times more MTF dollars than rural counties. However on a per capita basis, rural counties receive 57 percent more MTF dollars than urban counties. Rural counties have three times more miles of road per capita than urban counties. Thus there is a tradeoff in allocating MTF dollars on a population basis, which would benefit urban counties, and a miles of roads basis, which would benefit rural counties. The current MTF distribution formula tries to strike a balance between this tradeoff.
Graphics 13-16 illustrate average road and bridge conditions for urban versus rural counties. They show that there is essentially no difference in average road conditions in urban versus rural counties. And there are only minimal differences in the average condition of bridges. This suggests that Act 51 might be striking the right balance in allocating MTF dollars.
Seventy-five percent of MTF funds distributed to cities and villages are used for major streets and 25 percent are used for local streets. Sixty percent of the major and local street distribution is based on population and 40 percent is based on road miles.[52] The MTF funds used for local streets must be matched by the municipality.[53]
In addition to these issues, the per-mile trunkline distribution is double what is allocated for major street maintenance and repair, which cities are responsible for maintaining. Approximately $61.5 million was distributed to cities for trunkline maintenance in 2017, even though cities are not responsible for maintaining these roads.[]
In short, distributions from the Michigan Transportation Fund to cities and villages function in a similar way to counties in that the distribution is based on population and road mileage. Multiplying major road mileage by a population factor and giving municipalities with a population over 25,000 an allocation based on trunkline miles (which is also multiplied by the population factor) skews the distribution toward larger cities. Money distributed to counties is not, by contrast, skewed this way.
Since cities and villages are responsible for maintaining certain roads and PASER data exists at the city and village level, it is possible to calculate a correlation between municipal millages and road conditions. For cities, there is a strong correlation between the two. Fifty-eight percent of roads in cities without a road millage are in poor condition, on average. If a city has a road millage, each mill is correlated with a six-point reduction in the percentage of its roads that are in poor condition, a result that is statistically significant. In other words, a city with a one-mill road millage will have 52 percent of its roads in poor condition, on average, compared to 58 percent for a city with no road millage.
The correlation is weaker for villages. Forty-seven percent of roads in villages without road millages are in poor condition. Each mill of a road millage is only correlated with a three-tenths of a point reduction in the percentage of roads in poor condition, a result that is not statistically significant. One potential explanation for this is that villages have smaller populations than cities and typically less taxable property value, so a road millage in a village might not collect as much revenue as a road millage in a city, limiting the number of improvements the village can undertake. A village might just need a substantially higher millage rate than a city to get the dollars needed to improve its average quality in a way that would make a significant difference. The average road millage for villages is 3.3 mils, one mill higher than the average rate for cities.
According to the Michigan Department of Treasury, only three municipalities have SADs dedicated to road funding: the townships of Clarence, Porter and Lenox in Calhoun, Van Buren and Macomb counties, respectively. The vast majority of special assessment districts used in the state are for fire services.[**]
Complicating matters further, the cost of maintaining and constructing roads steadily increased. In other words, the real purchasing power of the money government officials have to spend on road maintenance declined substantially.
For instance, the price of crude oil plays a substantial role in determining how far road dollars will go as it is an important ingredient in asphalt. Graphic 21 plots the monthly price of a barrel of West Texas Intermediate crude oil versus the monthly price of a ton of liquid asphalt. Since the price of a ton of asphalt is roughly five times that of a barrel of crude oil, dividing the price of asphalt by five makes the relationship between the two easier to see. Note that the two lines appear to move in tandem.
The report recommends countries to incorporate free trade zones (FTZs) into their anti-money laundering (AML) regime and that adequate IFF risk assessments are conducted of FTZs, including separate reporting of goods/commodities moving in and out of them.
Road trips are a great way to have a family vacation without breaking the bank. With a little bit of planning, you can make your road trips even more frugal by learning some tricks to save money on gas, food, entertainment, and accommodations.
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