Where Does the Money Come From

Where Does the Money Come From.....

The Michigan Transportation Fund

The primary source of revenue to county road agencies comes from the Michigan Transportation Fund (MTF). All state fuel taxes, vehicle registration fees and other transportation-related fees are deposited into the MTF and distributed according to a formula established in Public Act 51 of 1951.

For many years the largest source of income to the MTF has been the state gasoline tax. A combination of more fuel-efficient vehicles and motorists changing driving habits and purchasing less fuel have eroded the power of fuel taxes, making their future as a long term funding solution uncertain.

The Michigan Legislature last increased the gasoline tax in 1997 from 15 cents per gallon to 19 cents per gallon. The tax on diesel fuel was not increased. Of this four cent increase, three cents were distributed to state and local road agencies. The other penny was dedicated to bridges, with one half cent directed to MDOT to fix seriously deficient bridges on the state road system, and the other half cent directed to local road agencies under the Local Bridge Program.

Federal Funds

A federal fuel tax of 18.4 cents per gallon is collected on each gallon sold in the United States. Michigan receives approximately 92 cents on each dollar sent to Washington D.C.

Approximately 75 percent of federal funding is allocated to MDOT, leaving 25 percent to be distributed among 83 county road commissions and 533 cities and villages across the state. These funds are dispersed according to regional formulas.

Both MDOT and local road agencies are required to provide a match to federal funds. If local and state road agencies cannot provide the matching funds, the federal funds are returned to the Federal Highway Trust Fund, and made available to other states.

According to the County Road Association of Michigan in 2009, it was estimated that by 2010 Michigan could lose nearly $1 billion annually in federal funding due to the lack of sufficient state and local funds to provide the required match to federal aid. This means tax revenues collected in Michigan will be given to other states, severely reducing or eliminating federal funding available to Michigan's state and local road agencies.

Local Funds

Statewide the ability of counties and townships to generate additional funding with special assessments and millages varies significantly, ranging from 0 to as much as 20 percent. Beginning with 2015, and through 2019, the Kalkaska County Road Commission will receive approximately $700,000 in property tax revenue. The Kalkaska County Road Commission also contracts with the various Townships on road projects.

This funding information was obtained from a report prepared by the County Road Association of Michigan, “Michigan's County Road Commissions, Driving our Economy Forward”.