SENATE BILL No. 944

 

 

April 17, 2018, Introduced by Senator BIEDA and referred to the Committee on Transportation.

 

 

     A bill to amend 1951 PA 51, entitled

 

"An act to provide for the classification of all public roads,

streets, and highways in this state, and for the revision of that

classification and for additions to and deletions from each

classification; to set up and establish the Michigan transportation

fund; to provide for the deposits in the Michigan transportation

fund of specific taxes on motor vehicles and motor vehicle fuels;

to provide for the allocation of funds from the Michigan

transportation fund and the use and administration of the fund for

transportation purposes; to promote safe and efficient travel for

motor vehicle drivers, bicyclists, pedestrians, and other legal

users of roads, streets, and highways; to set up and establish the

truck safety fund; to provide for the allocation of funds from the

truck safety fund and administration of the fund for truck safety

purposes; to set up and establish the Michigan truck safety

commission; to establish certain standards for road contracts for

certain businesses; to provide for the continuing review of

transportation needs within the state; to authorize the state

transportation commission, counties, cities, and villages to borrow

money, issue bonds, and make pledges of funds for transportation

purposes; to authorize counties to advance funds for the payment of

deficiencies necessary for the payment of bonds issued under this

act; to provide for the limitations, payment, retirement, and

security of the bonds and pledges; to provide for appropriations

and tax levies by counties and townships for county roads; to


authorize contributions by townships for county roads; to provide

for the establishment and administration of the state trunk line

fund, local bridge fund, comprehensive transportation fund, and

certain other funds; to provide for the deposits in the state trunk

line fund, critical bridge fund, comprehensive transportation fund,

and certain other funds of money raised by specific taxes and fees;

to provide for definitions of public transportation functions and

criteria; to define the purposes for which Michigan transportation

funds may be allocated; to provide for Michigan transportation fund

grants; to provide for review and approval of transportation

programs; to provide for submission of annual legislative requests

and reports; to provide for the establishment and functions of

certain advisory entities; to provide for conditions for grants; to

provide for the issuance of bonds and notes for transportation

purposes; to provide for the powers and duties of certain state and

local agencies and officials; to provide for the making of loans

for transportation purposes by the state transportation department

and for the receipt and repayment by local units and agencies of

those loans from certain specified sources; and to repeal acts and

parts of acts,"

 

by amending sections 10a, 12, 12b, 13, and 14 (MCL 247.660a,

 

247.662, 247.662b, 247.663, and 247.664), section 10a as amended by

 

1992 PA 137 and sections 12, 13, and 14 as amended by 2015 PA 175.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 10a. (1) Annually the state transportation The department

 

shall annually determine the miles mileage of state trunk line

 

highways, county primary and local roads, and city and village

 

major and local streets transferred to and from state, county,

 

city, or village jurisdiction during the preceding period of July 1

 

to June 30. In each year after that determination, the transferred

 

mileage shall be accumulated and added to the mileage transferred

 

in each subsequent July 1 to June 30 period.

 

     (2) The current average revenue worth per mile of a county

 

primary road and a county local road shall be determined annually

 

by dividing the total county primary and local road mileages

 

respectively as of the first day of the preceding July 1 to June 30

 

period into the total amount of Michigan transportation funds


returned to counties pursuant to under this act for use on county

 

primary and local roads respectively during that period, except

 

money returned to counties pursuant to under section 12(2) and (3).

 

     (3) The total amount of money to be transferred from and to

 

the state trunk line fund, the counties, cities, and villages shall

 

be determined annually by multiplying the current revenue worth per

 

mile of a county primary road and a county local road respectively

 

by the number of accumulated miles in each category transferred

 

from and to state, county, city, or village jurisdiction. If the

 

transferred facility becomes classified as part of the local road

 

or street system of the receiving jurisdiction, the transfer of

 

money shall be calculated on the basis of the revenue worth per

 

mile of a county local road. In any other category of

 

jurisdictional transfer, the transfer of money shall be calculated

 

on the basis of the revenue worth per mile of a county primary

 

road.

 

     (4) For jurisdictional transfers made from the this state to a

 

county, city, or village after July 1, 1992, the amount in the

 

state trunk line fund to be transferred shall be transferred to the

 

county, city, or village receiving jurisdiction. If the transferred

 

highway is then classified as part of the local road or street

 

system of the receiving jurisdiction, the transfer of money to the

 

receiving jurisdiction shall be calculated on the basis of the

 

revenue worth per mile of a county local road as determined in

 

subsection (2). If the transferred highway is then classified as

 

part of the primary road or major street system of the receiving

 

jurisdiction, the transfer of money to the receiving jurisdiction


shall be calculated on the basis of the revenue worth per mile of a

 

county primary road as determined in subsection (2). This

 

subsection and subsection (5) shall do not be construed to effect

 

affect contracts entered into before or after the effective date of

 

this subsection pursuant to Act No. 166 of the Public Acts of 1965,

 

being sections 408.551 to 408.558 of the Michigan Compiled Laws,

 

July 15, 1992 under 1965 PA 166, MCL 408.551 to 408.558, for the

 

maintenance of a transferred highway.

 

     (5) In cities and villages with a population of 25,000 or

 

more, trunk line mileage that is transferred to local jurisdiction

 

after July 1, 1992 and is then classified as a major street shall

 

be certified at twice its measured length.

 

     (6) The transfer of funds under this section shall be included

 

each year in the October appropriation of the Michigan

 

transportation fund.

 

     (7) As used in this section, "mileage" means the total number

 

of lane miles on a highway, road, or street. As used in this

 

subsection, "lane miles" means the number of miles of pavement

 

going in 1 direction on a highway, road, or street, multiplied by

 

the number of lanes.

 

     Sec. 12. (1) The amount distributed to the county road

 

commissions shall be returned to the county treasurers in the

 

manner, for the purposes, and under the terms and conditions

 

specified in this section. The department and the county road

 

association County Road Association of Michigan shall jointly

 

develop incentives for counties to establish statewide purchasing

 

pools for the more efficient use of Michigan transportation funds.


     (2) Each county road commission shall be reimbursed in an

 

amount up to $10,000.00 per year for the sum paid to a licensed

 

professional engineer employed or retained by the county road

 

commission in the previous year. The sum shall be returned to each

 

county road commission certified by the department as complying

 

with this subsection regarding the employment of an engineer.

 

     (3) An amount equal to 1% of the total amount returned to the

 

county road commissions from the Michigan transportation fund

 

during the prior calendar year shall be withheld annually from the

 

counties' November monthly distribution provided for in section 17,

 

and the amount shall be returned to the county road commissions for

 

snow removal purposes as provided in section 12a.

 

     (4) An amount equal to 10% of the total amount returned to the

 

county road commissions from the Michigan transportation fund shall

 

be returned to each county road commission having county primary,

 

or county local road, or both, mileage in the urban areas as

 

determined pursuant to under section 12b. This sum shall be

 

distributed pursuant to as provided in section 12b. The return

 

shall be is in addition to the amounts provided in subsections (6)

 

and (7) and for the purposes stated in those subsections.

 

     (5) An amount equal to 4% of the total amount returned to the

 

county road commissions from the Michigan transportation fund shall

 

be returned to the county road commissions in the same percentages

 

as provided in subsection (7). All money returned to the county

 

road commissions as provided in under this subsection shall be

 

expended by the county road commissions for the preservation,

 

construction, acquisition, and extension of county local road


systems and shall be is in addition to the amounts provided in

 

subsection (7).

 

     (6) Seventy-five percent of the remainder of the total amount

 

to be returned to the counties shall be expended by each county

 

road commission for the preservation, construction, acquisition,

 

and extension of the county primary road system, including the

 

acquisition of a necessary right of way for the system, work

 

incidental to the system, and a roadside park or motor parkway

 

appurtenant to the system, and shall be returned to the counties as

 

follows:

 

     (a) Three-fourths of the amount in proportion to the amount

 

received within the respective county during the 12 months next

 

preceding the date of each monthly distribution, as specific taxes

 

upon registered motor vehicles under the Michigan vehicle code,

 

1949 PA 300, MCL 257.1 to 257.923.

 

     (b) One-tenth of the amount in the same proportion that the

 

total mileage in the county primary road system of each county

 

bears to the total mileage in all of the county primary road

 

systems of this state.

 

     (c) One eighty-third of the remaining 15% of the amount to

 

each county.

 

     (7) The balance of the remainder of the total amount to be

 

returned to counties shall be expended by each county road

 

commission for the preservation, construction, acquisition, and

 

extension of the county local road system as defined by this act,

 

including the acquisition of a necessary right of way for the

 

system, work incidental to the system, and a roadside park or motor


parkway appurtenant to the system, and shall be returned to the

 

counties as follows:

 

     (a) Sixty-five percent of the amount in the same proportion

 

that the total mileage in the county local road system of each

 

county bears to the total mileage in all of the county local road

 

systems of the this state.

 

     (b) Thirty-five percent of the amount in the same proportion

 

that the total population outside of incorporated municipalities in

 

each county bears to the total population outside of incorporated

 

municipalities in all of the counties of the this state, according

 

to the most recent statewide federal census as certified at the

 

beginning of the state fiscal year.

 

     (8) Money deposited in, or becoming a part of the county road

 

funds of a board of county road commissioners shall be expended

 

first for the payment of principal and interest on the bonds, for

 

the payment of contractual contributions pledged for the payment of

 

bonds, for debt service requirements for the payment of contractual

 

contributions pledged for the payment of bonds, and for debt

 

service requirements for the payment of notes and loans in the

 

following order of priority:

 

     (a) For the payment of contributions required to be made by a

 

board of county road commissioners under a contract entered into

 

under 1941 PA 205, MCL 252.51 to 252.64, that have been pledged for

 

the payment of the principal and interest on bonds issued under

 

that act, or for the payment of total debt service requirements

 

upon notes issued by a board of county road commissioners under

 

1943 PA 143, MCL 141.251 to 141.254.


     (b) For the payment of principal and interest upon bonds

 

issued under section 18c, and the payment of contributions of a

 

board of county road commissioners made pursuant to contracts

 

entered into under section 18d that are pledged to the payment of

 

principal and interest on bonds issued after June 30, 1957, under

 

the authorization of section 18c and contracts executed pursuant to

 

section 18c.

 

     (c) For the payment of principal and interest upon loans

 

received pursuant to under section 11(5), to the extent other funds

 

have not been made available for that payment.

 

     (9) Beginning November 1, 2008, no more than 50% per year of

 

the amount returned to a county for use on the county primary road

 

system may be expended, with or without matching, on the county

 

local road system of that county. Except as otherwise provided in

 

this subsection, beginning September 30, 2010, no more than 30% per

 

year of the amount returned to a county for use on the county

 

primary road system may be expended, with or without matching, on

 

the county local road system of that county. An additional amount,

 

not to exceed 20% per year of the amount returned to a county for

 

use on the county primary road system, may be expended on the

 

county local road system of that county if there is an emergency or

 

if the county road commission determines that an additional 20% may

 

be expended on the county local road system. The county road

 

commission may attach any conditions to its determination if the

 

determination is for nonemergency purposes, including, but not

 

limited to, a requirement that the additional 20% expended on the

 

county local road system only be used to supplement money from


other sources. No more than 15% per year of the amount returned to

 

a county for expenditure on the county local road system may be

 

used, with or without matching, on the county primary road system

 

of that county, and not to exceed an additional 15% per year of the

 

amount returned to a county for expenditure on the county local

 

road system, may, in case of an emergency or with the approval of

 

the county road commission, be expended, with or without matching,

 

on the county primary road system of that county. An amount

 

returned to a county for and on account of county local roads under

 

this section that is in excess of the total amount paid into the

 

county treasury each year by all of the townships of that county

 

for and on account of the county local roads pursuant to under

 

section 14(6) may be transferred to and expended on the county

 

primary road system of that county.

 

     (10) Not less than 20% per year of the money returned to a

 

county by this section shall be expended for snow and ice removal,

 

the construction or reconstruction of a new highway or existing

 

highway, and the acquisition of a necessary right of way for those

 

highways, and work incidental to those highways, or for the

 

servicing of bonds issued by the county for these purposes. A

 

county may expend surplus money for the development, construction,

 

or repair of an off-street parking facility.

 

     (11) Not more than 5% per year of the money returned to a

 

county for the county primary road system and the county local road

 

system shall be expended for the maintenance, improvement, or

 

acquisition of appurtenant roadside parks and motor parkways.

 

     (12) Money returned to a county shall be expended by the


county road commission for the purposes provided in this section

 

and shall be deposited by the county treasurer in a designated

 

county depository, in a separate account to the credit of the

 

county road fund, and shall be paid out only upon the order of the

 

county road commission, and interest accruing on the money shall

 

become a part of, and be deposited with the county road fund.

 

     (13) In a county to which money is returned under this

 

section, the function of the county road commission is limited to

 

the formation of policy and the performance of the official duties

 

imposed by law and delegated by the county board of commissioners.

 

A member of the county road commission shall not be employed

 

individually in any other capacity for other duties with the county

 

road commission.

 

     (14) A county road commission may enter into an agreement with

 

a county road commission of an adjacent county and with a city or

 

village to perform work on a highway, road, or street, and with the

 

department with respect to a state trunk line highway and

 

connecting links of the state trunk line highway within the limits

 

of the county or adjacent to the county. The agreement may provide

 

for the performance by each contracting party of the work

 

contemplated by the contract including engineering services and the

 

acquisition of rights of way in connection with the work

 

contemplated, by purchase or condemnation, by any of the

 

contracting parties in its own name and the agreement may provide

 

for joint participation in the costs.

 

     (15) Money distributed from the Michigan transportation fund

 

may be expended for construction purposes on county local roads


only to the extent matched by money from other sources. However,

 

Michigan transportation funds may be expended for the construction

 

of bridges on the county local roads in an amount not to exceed 75%

 

of the cost of the construction of local road bridges.

 

     (16) Notwithstanding any other provision of this act, at least

 

90% of the state revenue returned annually to the county road

 

commission from the Michigan transportation fund less the amounts

 

described in subdivisions (a) to (e) shall be expended annually by

 

the county road commission for the preservation of highways, roads,

 

streets, and bridges, and for the payment of contractual

 

contributions pledged for the payment of bonds or portions of

 

bonds, debt service requirements for the payment of bonds or

 

portions of bonds, and debt service requirements for the payment of

 

notes and loans or portions of notes and loans issued or received

 

after July 1, 1983, for the purpose of providing money for the

 

preservation of highways, roads, streets, and bridges. If an

 

appropriate certificate is filed under subsection (18) but only to

 

the extent necessary, this subsection does not prohibit the use of

 

any amount of state revenue returned annually to the county road

 

commissions for the payment of contractual contributions pledged

 

for the payment of bonds, for debt service requirements for the

 

payment of bonds, and for debt service requirements for the payment

 

of notes or loans, whenever issued or received, as specified under

 

subsection (8). The amounts that are deducted from the state

 

revenue returned to a county road commission from the Michigan

 

transportation fund, for the purpose of the calculation required by

 

this subsection are as follows:


     (a) Amounts expended for the purposes described in subsection

 

(8) for bonds, notes, loans, or other obligations issued or

 

received before July 2, 1983.

 

     (b) Amounts expended for the administrative costs of the

 

county road commission.

 

     (c) Amounts expended for capital outlay projects for equipment

 

and buildings, and for the payment of contractual contributions

 

pledged for the payment of bonds, for debt service requirements for

 

the payment of bonds, and for debt service requirements for the

 

payment of notes and loans issued or received after July 1, 1983,

 

for the purpose of providing funds for capital outlay projects for

 

equipment and buildings.

 

     (d) Amounts expended for projects vital to the economy of the

 

local area or the safety of the public in the local area. Before

 

these amounts can be deducted, the governing body over the county

 

road commission or the county road commission, as applicable, shall

 

pass a resolution approving these projects. This resolution shall

 

state which projects will be funded and the cost of each project. A

 

copy of each approved resolution shall be forwarded immediately to

 

the department.

 

     (e) Amounts expended in urban areas as determined pursuant to

 

under section 12b.

 

     (17) As used in this subsection, "urban routes" means those

 

portions of 2-lane county primary roads within an urban area that

 

have average daily traffic in excess of 15,000. Notwithstanding any

 

other provision of this act, except as provided in this subsection,

 

a county road commission shall annually expend at least 90% of the


federal revenue distributed to the county road commission for

 

highways, roads, streets, and bridges, less the amount expended on

 

urban routes for purposes other than preservation and the amount

 

expended for hard-surfacing of gravel roads on the federal-aid

 

system, on the preservation of highways, roads, streets, and

 

bridges. A county road commission may expend in 1 year less than

 

90% of the federal revenue distributed to the county road

 

commission for highways, roads, streets, and bridges, less the

 

amount expended on urban routes for purposes other than

 

preservation and the amount expended for hard-surfacing of gravel

 

roads on the federal-aid system, on the preservation of highways,

 

roads, streets, and bridges, if that year is part of a 3-year

 

period in which at least 90% of the total federal revenue

 

distributed in the 3-year period to the county road commission for

 

highways, roads, streets, and bridges, less the amount expended on

 

urban routes for purposes other than preservation purposes and the

 

amount expended for hard-surfacing of gravel roads on the federal-

 

aid system, is expended on the preservation of highways, roads,

 

streets, and bridges. If a county road commission expends in 1 year

 

less than 90% of the federal revenue distributed to the county road

 

commission for highways, roads, streets, and bridges, less the

 

amount expended on urban routes for purposes other than

 

preservation and the amount expended for hard-surfacing of gravel

 

roads on the federal-aid system, on the preservation of highways,

 

roads, streets, and bridges and that year is not a part of a 3-year

 

period in which at least 90% of the total federal revenue

 

distributed in the 3-year period to the county road commission for


highways, roads, streets, and bridges, less the amount expended on

 

urban routes for purposes other than preservation and the amount

 

expended for hard-surfacing of gravel roads on the federal-aid

 

system, is expended on the preservation of highways, roads,

 

streets, and bridges, the county road commission shall expend in

 

each year subsequent to the 3-year period 100%, or less in 1 year

 

if sufficient for the purposes of this subsection, of the federal

 

revenue distributed to the county road commission for highways,

 

roads, streets, and bridges, less the amount expended on urban

 

routes for purposes other than preservation and the amount expended

 

for hard-surfacing of gravel roads on the federal-aid system, on

 

the preservation of highways, roads, streets, and bridges until the

 

average percentage spent on the preservation of highways, roads,

 

streets, and bridges in the 3-year period and the subsequent years,

 

less the amount expended on urban routes for purposes other than

 

preservation and the amount expended for hard-surfacing of gravel

 

roads on the federal-aid system, is at least 90%. A year may be

 

included in only one 3-year period for the purposes of this

 

subsection. The requirements of this subsection shall be are waived

 

if compliance would cause the county road commission to be

 

ineligible for federal revenue under federal law, but only to the

 

extent necessary to make the county road commission eligible for

 

that revenue under federal law. For the purpose of the calculations

 

required by this subsection, the amount expended on urban routes by

 

a county road commission for purposes other than preservation and

 

the amount expended for hard-surfacing of gravel roads on the

 

federal-aid system shall be deducted from the total federal revenue


distributed to the use of the county road commission. As used in

 

this subsection, "urban routes" means the portions of 2-lane county

 

primary roads within an urban area that have average daily traffic

 

in excess of 15,000.

 

     (18) A county road commission shall certify to the department

 

on or before the issuance of any bonds or notes issued after July

 

1, 1983, pursuant to 1943 PA 143, MCL 141.251 to 141.254, 1941 PA

 

205, MCL 252.51 to 252.64, or section 18c or 18d, for purposes

 

other than the preservation of highways, roads, streets, and

 

bridges and purposes other than the purposes specified in

 

subsection (16)(c) that its average annual debt service

 

requirements for all bonds and notes or portions of bonds and notes

 

issued after July 1, 1983, for purposes other than the preservation

 

of highways, roads, streets, and bridges and other than for the

 

purposes specified in subsection (16)(c), including the bond or

 

note to be issued does not exceed 10% of the money returned to the

 

county road commission pursuant to under this act, less the amounts

 

specified in subsection (16)(a), (b), and (c) during the last

 

completed fiscal year of the county road commission. If the purpose

 

for which the bonds or notes are issued is changed after the

 

issuance of the notes or bonds, the change shall be made in a

 

manner that maintains compliance with the certification required by

 

this subsection, as of the date the certificate was originally

 

issued, but no such the change shall does not invalidate or

 

otherwise affect the bonds or notes with respect to which the

 

certificate was issued or the obligation to pay debt service on the

 

bonds or notes. A certification under this subsection is conclusive


as to the matters stated in the certification for purposes of the

 

validity of bonds and notes.

 

     (19) In each charter county to which funds are returned under

 

this section, the responsibility for road improvement,

 

preservation, and traffic operation work, and the development,

 

construction, or repair of off-road parking facilities and

 

construction or repair of road lighting shall be coordinated by a

 

single administrator designated by the county executive who shall

 

be responsible for and shall represent the charter county in

 

transactions with the department pursuant to under this act.

 

     (20) Not more than 10% per year of all of the money received

 

by and returned to a county from any source for the purposes of

 

this section may be expended for administrative expenses. A county

 

that expends more than 10% for administrative expenses in a year is

 

subject to section 14(5) unless a waiver is granted by the

 

department of treasury. As used in this subsection, "administrative

 

expenses" means those expenses that are not assigned including, but

 

not limited to, specific road construction or preservation projects

 

and are often referred to as general or supportive services.

 

Administrative expenses do not include net equipment expense, net

 

capital outlay, debt service principal and interest, and payments

 

to other state or local offices that are assigned, but not limited

 

to, specific road construction projects or preservation activities.

 

     (21) In addition to the financial compliance audits required

 

by law, the department may conduct performance audits and make

 

investigations of the disposition of all state money received by

 

county road commissions, county boards of commissioners, or any


other county governmental agency acting as the county road

 

authority, for transportation purposes to determine compliance with

 

the terms and conditions of this act. Performance audits shall be

 

conducted according to government auditing standards issued by the

 

United States General Accounting Office. The department shall

 

develop performance audit procedures and reporting requirements

 

sufficient to determine whether money expended under this section

 

was expended in compliance with this act by September 1, 2012 and

 

shall report to the transportation committees of the senate and

 

house of representatives no later than October 1, 2012 on the

 

additional audit procedures and reporting requirements. The

 

department shall provide notice to the county road commission,

 

county board of commissioners, or any other county governmental

 

agency acting as the county road authority, as applicable, of the

 

standards to be used for audits performed under this subsection.

 

The notice shall be provided 6 months prior to the fiscal year in

 

which the audit is conducted. The department shall notify the

 

county road commission, county board of commissioners, or any other

 

county governmental agency acting as the county road authority of

 

any subsequent changes to the standards. County road commissions,

 

county boards of commissioners, or any other county governmental

 

agencies acting as county road authorities, as applicable, shall

 

make available to the department the pertinent records for the

 

audit. Performance audits may be performed at the discretion of the

 

department or upon receiving a request from the speaker of the

 

house of representatives or the senate majority leader.

 

     (22) Of the amounts appropriated for a county primary or local


road system under this section, where possible, a county road

 

commission shall secure pavement warranties for full replacement or

 

appropriate repair for contracted construction work on pavement

 

projects whose cost exceeds $2,000,000.00 and projects for new

 

construction or reconstruction undertaken after the effective date

 

of the amendatory act that added this subsection, April 1, 2016, if

 

allowed by the federal highway administration Federal Highway

 

Administration and the department. A county road commission shall

 

submit a proposed warranty program to the department for approval

 

no later than April 1, 2016. If a proposed warranty program

 

submitted under this subsection is approved by the department, the

 

county road commission shall implement the program no later than 1

 

year after the approval. A county road commission shall include a

 

list of all warranties that were secured under this subsection and

 

indicate whether any of those warranties were redeemed with the

 

report required under section 14(3), and shall also list all

 

pavement projects whose cost exceeds $2,000,000.00 for which a

 

warranty was not secured. The list shall include, but is not

 

limited to, all of the following information:

 

     (a) The type of project.

 

     (b) The cost or estimated cost of the project.

 

     (c) The expected lifespan of the project.

 

     (d) Whether or not the project met or is currently meeting its

 

expected lifespan.

 

     (e) If the project failed to meet or is not meeting its

 

expected lifespan, the cause of the failure and the cost to replace

 

or repair the project.


     (f) The entity responsible for paying the cost of replacing or

 

repairing the project.

 

     (23) As used in this section, "mileage" means the total number

 

of lane miles of a highway, road, or street. As used in this

 

subsection, "lane miles" means the number of miles of pavement

 

going in 1 direction on a highway, road, or street, multiplied by

 

the number of lanes.

 

     Sec. 12b. (1) The amounts returned to the counties for the

 

county urban system as provided in section 12(4) shall be

 

distributed on the basis of the county road mileage contained

 

within the urban area boundaries as established pursuant to under

 

this section.

 

     (2) On January 3, 1973, the department of transportation shall

 

establish urban area boundaries which that shall be reviewed and

 

corrected periodically and which that shall be in conformance with

 

the federal-aid urban area definition as published by the federal

 

highway administration of the United States department of

 

transportation Federal Highway Administration and in effect July 1,

 

1971.

 

     (3) The amounts returned to the county road commissions

 

qualifying under this section shall be in the same proportion that

 

the total urban local road mileage , plus 6 times the urban primary

 

road mileage of each county bears to the total mileage in all the

 

urban local road systems of the this state, plus 6 times the total

 

mileage in all the urban primary road systems of the this state.

 

     (4) All amounts returned to the county road commissions on the

 

basis of the urban primary road mileage of each county are for use


on the county primary road system and are subject to the same

 

provisions of this act as other amounts for expenditure on the

 

county primary road system.

 

     (5) All amounts returned to the county road commissions on the

 

basis of the urban local road mileage of each county are for

 

expenditure on the county local road system and are subject to the

 

same provisions of this act as other amounts for expenditure on the

 

county local road systems.

 

     (6) As used in this section, "mileage" means the total number

 

of lane miles of a highway, road, or street. As used in this

 

subsection, "lane miles" means the number of miles of pavement

 

going in 1 direction on a highway, road, or street, multiplied by

 

the number of lanes.

 

     Sec. 13. (1) The amount distributed to cities and villages

 

shall be returned to the treasurers of the cities and villages in

 

the manner, for the purposes, and under the terms and conditions

 

specified in this section. The amount received by a newly

 

incorporated municipality shall be in place of any other direct

 

distribution of money from the Michigan transportation fund. The

 

population of a newly incorporated municipality as determined under

 

this section shall be added to the total population of all

 

incorporated cities and villages in the this state in computing the

 

amounts to be returned under this section to each municipality in

 

the state. Major street mileage, local street mileage, and

 

equivalent major mileage, if applicable, shall be determined by the

 

department before the next month for which distribution is made

 

following the effective date of incorporation of a newly


incorporated municipality.

 

     (2) From the amount available for distribution to cities and

 

villages during each December, an amount equal to 0.7% of the total

 

amount returned to all cities and villages under subsections (3)

 

and (4) during the previous calendar year shall be withheld. The

 

amount withheld shall be used to partially reimburse cities and

 

villages located in counties that are eligible for snow removal

 

funds pursuant to under section 12a and that have costs for winter

 

maintenance on major and local streets that are greater than the

 

statewide average. The distributions shall be made annually during

 

February and shall be calculated separately for the major and local

 

street systems but may be paid in a combined warrant. The

 

distribution to a city or village shall be equal to 1/2 of its

 

winter maintenance expenditures after deducting the product of its

 

total earnings under subsections (3) and (4) multiplied by 2 times

 

the average municipal winter maintenance factor. Winter maintenance

 

expenditures shall be determined from the street financial reports

 

for the most current fiscal years ending before July 1. A city or

 

village that does not submit a street financial report for the

 

fiscal year ending before July 1 by the subsequent December 31 is

 

ineligible for the winter maintenance payment that is to be based

 

on that street financial report. The department shall determine the

 

average municipal winter maintenance factor annually by dividing

 

the total expenditures of all cities and villages on winter

 

maintenance of streets and highways by the total amount earned by

 

all cities and villages under subsections (3) and (4) during the 12

 

months. If the sum of the distributions to be made under this


subsection exceeds the amount withheld, the distributions to each

 

eligible city and village shall be reduced proportionately. If the

 

sum is less than the amount withheld, the balance shall be added to

 

the amount available for distribution under subsections (3) and (4)

 

during the next month. The distributions shall be are for use on

 

the major and local street systems respectively and shall be are

 

subject to the same provisions as money returned under subsections

 

(3) and (4).

 

     (3) Seventy-five percent of the remaining amount to be

 

returned to the cities and villages, after deducting the amounts

 

withheld pursuant to under subsection (2), shall be returned 60% in

 

the same proportion that the population of each bears to the total

 

population of all cities and villages, and 40% in the same

 

proportion that the equivalent major mileage in each bears to the

 

total equivalent major mileage in all cities and villages. The

 

amount returned under this subsection shall be used by each city

 

and village for the following purposes in the following order of

 

priority:

 

     (a) For the payment of contributions required to be made by a

 

city or village under the provisions of contracts previously

 

entered into under 1941 PA 205, MCL 252.51 to 252.64, that have

 

been previously pledged for the payment of the principal and

 

interest on bonds issued under that act; or for the payment of the

 

principal and interest upon bonds issued by a city or village

 

pursuant to under 1952 PA 175, MCL 247.701 to 247.707.

 

     (b) Payment of obligations of the city or village on highway

 

projects undertaken by the city or village jointly with the


department.

 

     (c) For the payment of principal and interest upon loans

 

received pursuant to section 11(5), to the extent other money has

 

not been made available for that payment.

 

     (d) For the preservation, construction, acquisition, and

 

extension of the major street system as defined by this act

 

including the acquisition of a necessary right of way for the

 

system, work incidental to the system, and an appurtenant roadside

 

park or motor parkway, of the city or village and for the payment

 

of the principal and interest on that portion of the city's or

 

village's general obligation bonds that are attributable to the

 

construction or reconstruction of the city's or village's major

 

street system. Not more than 5% per year of the money returned to a

 

city or village by this subsection shall be expended for the

 

preservation or acquisition of appurtenant roadside parks and motor

 

parkways. Surplus money may be expended for the development,

 

construction, or repair of off-street parking facilities, the

 

construction or repair of street lighting, and or transfer to the

 

local street system under subsection (6).

 

     (e) For capital outlay projects for equipment and buildings,

 

contributions pledged for the payment of loans and for the payment

 

of contractual debt service requirements for the payment of bonds

 

for the purpose of providing money for capital outlay projects for

 

equipment and buildings necessary to the development and

 

maintenance of the road system so long as amounts allocated under

 

this subdivision are used for transportation purposes.

 

     (4) The remaining amount to be returned to incorporated cities


and villages shall be expended in each city or village for the

 

preservation, construction, acquisition, and extension of the local

 

street system of the city or village, including the acquisition of

 

a necessary right of way for the system, work incidental to the

 

system, and subject to subsection (5), for the payment of the

 

principal and interest on the portion of the city's or village's

 

general obligation bonds that are attributable to the construction

 

or reconstruction of the city's or village's local street system.

 

The amount returned under this subsection shall be returned to the

 

cities and villages 60% in the same proportion that the population

 

of each bears to the total population of all incorporated cities

 

and villages in the this state, and 40% in the same proportion that

 

the total mileage of the local street system of each bears to the

 

total mileage in the local street systems of all cities and

 

villages of the this state. The payment of the principal and

 

interest upon bonds issued by a city or village pursuant to under

 

1952 PA 175, MCL 247.701 to 247.707, and after that payment, the

 

payment of debt service on loans received under section 11(5),

 

shall have priority in the expenditure of money returned under this

 

subsection.

 

     (5) Money distributed to each city and village for the

 

maintenance and preservation of its local street system under this

 

act represents the total responsibility of the this state for local

 

street system support. Money distributed from the Michigan

 

transportation fund shall not be expended for construction purposes

 

on city and village local streets except to the extent matched from

 

local revenues including other money returned to a city or village


by this state under the state constitution of 1963 and statutes of

 

this state, from money that can be raised by taxation in cities and

 

villages for street purposes within the limitations of the state

 

constitution of 1963 and statutes of this state, from special

 

assessments, or from any other source.

 

     (6) Money returned under this section to a city or village

 

shall be expended on the major and local street systems of that

 

city or village. However, the first priority is the major street

 

system. Money returned for expenditure on the major street system

 

shall be expended in the priority order provided in subsection (3)

 

except that surplus money may be transferred for preservation of

 

the local street system. Major street money transferred for use on

 

the local street system shall not be used for construction but may

 

be used for preservation. A city or village shall not transfer more

 

than 50% of its annual major street funding for the local street

 

system unless it has adopted and is following an asset management

 

process for its major and local street systems and adopts a

 

resolution with a copy to the department setting forth all of the

 

following:

 

     (a) A list of the major streets in that city or village.

 

     (b) A statement that the city or village is adequately

 

maintaining its major streets.

 

     (c) The dollar amount of the transfer.

 

     (d) The local streets to be funded with the transfer.

 

     (e) A statement that the city or village is following an asset

 

management process for its major and local street systems.

 

     (7) A city or village that has not adopted an asset management


plan shall obtain the concurrence of the department to transfer

 

more than 50% of its major street funding to its local street

 

system. The department may provide for pilot projects that would

 

allow a city or village that has adopted an asset management plan

 

under subsection (6) to combine their local and major street funds

 

into 1 street fund and to submit a single report to the department

 

on the expenditure of money on the local and major street systems.

 

     (8) Not more than 10% per year of all of the money returned to

 

a city or village from any source for the purposes of this section

 

may be expended for administrative expenses. A city or village that

 

expends more than 10% for administrative expenses in a year is

 

subject to section 14(5).

 

     (9) In each city and village to which money is returned under

 

this section, the responsibility for street preservation and the

 

development, construction, or repair of off-street parking

 

facilities and construction or repair of street lighting shall be

 

coordinated by a single administrator designated by the governing

 

body who shall be responsible for and shall represent the

 

municipality in transactions with the department pursuant to under

 

this act.

 

     (10) Cities and villages may provide for consolidated street

 

administration. A city or a village may enter into an agreement

 

with other cities or villages, the county road commission, or with

 

the state transportation commission for the performance of street

 

or highway work on a road or street within the limits of the city

 

or village or adjacent to the city or village. The agreement may

 

provide for any of the contracting parties to perform the work


contemplated by the contracts including services and acquisition of

 

rights of way, by purchase or condemnation in its own name. The

 

agreement may provide for joint participation in the costs if

 

appropriate.

 

     (11) Interest earned on money returned to a city or a village

 

for purposes provided in this section shall be credited to the

 

appropriate street fund.

 

     (12) In addition to the financial compliance audits required

 

by law, the department may conduct performance audits and make

 

investigations of the disposition of all state money received by

 

cities and villages for transportation purposes to determine

 

compliance with the terms and conditions of this act. Performance

 

audits shall be conducted according to government auditing

 

standards issued by the United States General Accounting Office.

 

The department shall develop all performance audit procedures and

 

reporting requirements sufficient to determine whether money

 

expended under this section was expended in compliance with this

 

act by September 1, 2012 and shall report to the transportation

 

committees of the senate and house of representatives no later than

 

October 1, 2012 on the additional audit procedures and reporting

 

requirements. The audit procedures shall include a review of the

 

road fund balance of the city or village. The cities and villages

 

shall report their road fund balances by fund balance component.

 

The department shall assist cities and villages to ensure that road

 

fund balances are consistently classified and are in compliance

 

with the audit and reporting requirements of this section. The

 

department shall provide notice to cities and villages of the


standards to be used for audits under this subsection prior to the

 

fiscal year in which the audit is conducted. The department shall

 

notify cities and villages of any subsequent changes to the

 

standards. Cities and villages shall make available to the

 

department the pertinent records for the audit. Performance audits

 

may be performed at the discretion of the department or upon

 

receiving a request from the speaker of the house of

 

representatives or the senate majority leader.

 

     (13) Of the amounts appropriated for a city or village major

 

or local street system under this section, where possible, a city

 

or village shall secure pavement warranties for full replacement or

 

appropriate repair for contracted construction work on pavement

 

projects whose cost exceeds $2,000,000.00 and projects for new

 

construction or reconstruction undertaken after the effective date

 

of the amendatory act that added this subsection April 1, 2016 if

 

allowed by the federal highway administration Federal Highway

 

Administration and the department. A city or village shall submit a

 

proposed warranty program to the department for approval no later

 

than February 1, 2017. If a proposed warranty program submitted

 

under this subsection is approved by the department, the city or

 

village shall implement the program no later than 1 year after the

 

approval. A city or village shall include a list of all warranties

 

that were secured under this subsection and indicate whether any of

 

those warranties were redeemed with the report required under

 

section 14(3), and shall also list all pavement projects whose cost

 

exceeds $2,000,000.00 for which a warranty was not secured. The

 

list shall include, but is not limited to, all of the following


information:

 

     (a) The type of project.

 

     (b) The cost or estimated cost of the project.

 

     (c) The expected lifespan of the project.

 

     (d) Whether or not the project met or is currently meeting its

 

expected lifespan.

 

     (e) If the project failed to meet or is not meeting its

 

expected lifespan, the cause of the failure and the cost to replace

 

or repair the project.

 

     (f) The entity responsible for paying the cost of replacing or

 

repairing the project.

 

     (14) With the approval of the director of the department, a

 

city may use up to 20% of the amount received by that city under

 

this section for public transit purposes if more than 10,000,000

 

passengers used public transit within that city during the previous

 

fiscal year.

 

     (15) As used in this section:

 

     (a) "Administrative expenses" means expenses that are not

 

assigned under this section, including, but not limited to,

 

specific road construction or maintenance projects, and are often

 

referred to as general or supportive services. Administrative

 

expenses do not include net equipment expense, net capital outlay,

 

debt service principal and interest, or payments to other state or

 

local offices that are assigned, but not limited to, specific road

 

construction projects or maintenance activities.

 

     (b) "Equivalent major mileage" means the sum of 2 times the

 

state trunk line mileage certified by the department as of March 31


of each year, as being within the boundaries of each city and

 

village having a population of 25,000 or more, plus the major

 

street mileage in each city and village, multiplied by the

 

following factor:

 

     (i) 1.0 for cities and villages of 2,000 or less population.

 

     (ii) 1.1 for cities and villages from 2,001 to 10,000

 

population.

 

     (iii) 1.2 for cities and villages from 10,001 to 20,000

 

population.

 

     (iv) 1.3 for cities and villages from 20,001 to 30,000

 

population.

 

     (v) 1.4 for cities and villages from 30,001 to 40,000

 

population.

 

     (vi) 1.5 for cities and villages from 40,001 to 50,000

 

population.

 

     (vii) 1.6 for cities and villages from 50,001 to 65,000

 

population.

 

     (viii) 1.7 for cities and villages from 65,001 to 80,000

 

population.

 

     (ix) 1.8 for cities and villages from 80,001 to 95,000

 

population.

 

     (x) 1.9 for cities and villages from 95,001 to 160,000

 

population.

 

     (xi) 2.0 for cities and villages from 160,001 to 320,000

 

population.

 

     (xii) For cities over 320,000 population, a factor of 2.1

 

increased successively by 0.1 for each 160,000 population increment


over 320,000.

 

     (c) "Mileage" means the total number of lane miles of a

 

highway, road, or street. As used in this subdivision, "lane miles"

 

means the number of miles of pavement going in 1 direction on a

 

highway, road, or street, multiplied by the number of lanes.

 

     (d) (c) "Population" means the population according to the

 

most recent statewide federal census as certified at the beginning

 

of the state fiscal year, except that, if a municipality has been

 

newly incorporated since completion of the census, the population

 

of the municipality for purposes of the distribution of money

 

before completion of the next census shall be the population as

 

determined by special federal census, if there is a special federal

 

census, and if not, by the population as determined by the official

 

census in connection with the incorporation, if there is such a

 

census and, if not, by a special state census to be taken at the

 

expense of the municipality by the secretary of state pursuant to

 

under section 6 of the home rule city act, 1909 PA 279, MCL 117.6.

 

     Sec. 14. (1) Each county road commission and city and village

 

of the state shall prepare biennial primary road and major street

 

programs, based on long-range plans, and shall make the programs

 

available for review by the public.

 

     (2) Separate accounts shall be kept by cities, villages, and

 

county road commissions of all money returned from the Michigan

 

transportation fund. This subsection does not prevent the combining

 

of accounts on which separate bookkeeping records are kept into a

 

single deposit account.

 

     (3) All county road commissions, and cities, and villages


shall keep accurate and uniform records on all road and street work

 

and funds, and shall annually report to the department at the time,

 

in the manner, and on forms prescribed by the department the

 

mileage of each road system under their jurisdiction and the

 

receipts and disbursements of road and street funds. In the annual

 

report, each county road commission shall report on its compliance

 

in the preceding year with the requirements of section 12(16) and

 

(17). The report shall also specify, with respect to section

 

12(17), the total dollar amount expended for other than maintenance

 

purposes which would not have been permissible without the

 

deduction of certain urban route expenditures as permitted under

 

section 12(17). The report shall also specify the justification for

 

a waiver of the requirement of section 12(17), if that requirement

 

was waived. A county road commission, city, or village shall post

 

the report required by this subsection on its website, if the

 

county road commission, city, or village has a website.

 

     (4) The county road commissions and the cities and villages

 

are authorized to expend adequate amounts from funds returned by

 

this act to cover the cost of administration, engineering, and

 

record keeping, and expenditures for those purposes shall be

 

reported separately by each county road commission, city, and

 

village to the department.

 

     (5) All distributions and returns of funds provided for in

 

this act shall be withheld from the department, eligible

 

authorities, county road commissions, cities, villages, or other

 

eligible governmental agencies for failure to comply with any of

 

the requirements of this act, and the withholding shall continue


for the period of noncompliance.

 

     (6) Money distributed to county road commissions for the

 

maintenance and improvement of county local road systems pursuant

 

to under section 12 represents the total responsibility of this

 

state for local county road support. Additional funds required for

 

the support of county local road systems may be supplied from other

 

money returned to the township governments by this state under the

 

state constitution of 1963 and statutes of this state, or from

 

funds that can be raised by taxation in the townships or counties

 

for road purposes within the limitations of the state constitution

 

of 1963 and statutes of this state.

 

     (7) As used in this section, "mileage" means the total number

 

of lane miles of a highway, road, or street. As used in this

 

subsection, "lane miles" means the number of miles of pavement

 

going in 1 direction on a highway, road, or street, multiplied by

 

the number of lanes.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.