The two largest sources of road funding in Michigan are the vehicle registration fee and the state collected gas tax, which account for 89.7% of the Michigan Transportation Fund.
Diesel taxes, diesel carrier and license taxes and a few other smaller taxes account for the rest.
The state collected road funds are distributed among the state, county road commissions and cities & villages through a road funding formula that is spelled out in Michigan Public Act 51 of 1951.
In that act, the Legislature established a single pot for state collected road funds known as the Michigan Transportation Fund (MTF). It then created a formula for the distribution of those MTF funds.
According to the formula, money is first taken off the top of the MTF for a number of items including the bridge fund and public transportation. The formula then calls for 39.1 percent of the remaining money to go to MDOT (which has jurisdiction over 8 percent of Michigan’s roads), 39.1 percent to go to county road commissions (which have jurisdiction over 75 percent of Michigan’s roads) and 21.8 percent to go to cities and villages (which have jurisdiction over 17 percent of Michigan’s roads).
Michigan’s MTF dollars are not generating enough revenues to adequately maintain public roads in the state, nor are these revenues keeping up with inflation. In recent years, MTF revenues have declined. The problem is compounded by the fact that Michigan’s per capita road funding has lagged behind most states for at least 45 years.
The state gas tax was last raised more than a decade ago in 1997, when it was increased from $0.15 to $0.19 per gallon. Before that, it had not been increased since 1984, when it rose from $0.13 to $0.15 per gallon. Some states pay $0.30 per gallon or more.
There are federal funds available, generated by the $0.184 federal gas tax. But those funds are split among the Michigan Department of Transportation (MDOT), county road commissions and cities and villages. MDOT receives 75%, while the remaining 25% is divided among the 83 county road agencies and 533 cities and villages in Michigan. No single agency other than MDOT receives a very substantial amount.
Another source of potential funding is a millage, which is typically the result of decades of inadequate funding from the state and federal government. Residents understand the funding issues that local road commissions face, and they want to take action to improve the safety of roads in their communities.
A millage is a tax rate on property, expressed in mills per dollar of value of the property. The first known use of a millage was in 1891. Currently, there are 11 Michigan counties with millages.
As of 2009, Michigan had the eighth largest public road system in the nation, the sixth largest local roads system and the third largest county system. Michigan’s state highway system ranked as the 28th largest in the nation, but Michigan roads are ranked as some of the worst in the nation. From 1964 – 2006, Michigan has done a decent job of funding health and education. Roads, unfortunately, are a low priority, continuously ranking among the worst seven states, according to U.S. Census Bureau data.
Many of the states that continually ranked higher than Michigan in per capita road spending do not have the freeze/thaw cycles that Michigan experiences each spring and fall, which take a tremendous toll on paved roads. They also do not spend millions of dollars on snow and ice removal.