Bill Text: MI SB0281 | 2013-2014 | 97th Legislature | Engrossed

---

Bill Title: Highways; bridges; movable bridge fund; create, and require oversight of publicly owned movable bridges by department of transportation. Amends sec. 10 of 1951 PA 51 (MCL 247.660) & adds sec. 11g.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2014-12-02 - Referred To Committee On Transportation And Infrastructure [SB0281 Detail]

Download: Michigan-2013-SB0281-Engrossed.html

---

SB-0281, As Passed Senate, November 13, 2014

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 281

 

(As amended, November 13, 2014)

 

 

 

 

 

 

 

 

 

     <<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

Senate Bill No. 281 as amended November 13, 2014

 

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 10 and 13 (MCL 247.660 and 247.663), section 10

 

as amended by 2007 PA 210, and section 13 as amended by 2012 PA 298,

 

and by adding section 11g.>>

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 10. (1) A fund to be known as the Michigan transportation

 

fund is established and shall be set up and maintained in the state

 

treasury as a separate fund. Money received and collected under the

 

motor fuel tax act, 2000 PA 403, MCL 207.1001 to 207.1170, except a

 

license fee provided in that act, and a tax, fee, license, and

 

other money received and collected under sections 801 to 810 of the

 

Michigan vehicle code, 1949 PA 300, MCL 257.801 to 257.810, except

 

a truck safety fund fee provided in section 801(1)(k) of the

 

Michigan vehicle code, 1949 PA 300, MCL 257.801, and money received

 

under the motor carrier act, 1933 PA 254, MCL 475.1 to 479.43,

 

shall be deposited in the state treasury to the credit of the

 

Michigan transportation fund. In addition, income or profit derived

 

from the investment of money in the Michigan transportation fund

 

shall be deposited in the Michigan transportation fund. Except as

 

provided in this act, no other money, whether appropriated from the

 

general fund of this state or any other source, shall be deposited

 

in the Michigan transportation fund. Except as otherwise provided

 

in this section, the legislature shall appropriate funds money for

 

the necessary expenses incurred in the administration and

 

enforcement of the motor fuel tax act, 2000 PA 403, MCL 207.1001 to

 

207.1170, the motor carrier act, 1933 PA 254, MCL 475.1 to 479.43,

 

and sections 801 to 810 of the Michigan vehicle code, 1949 PA 300,

 

MCL 257.801 to 257.810. Funds Money appropriated for necessary

 

expenses shall be based upon established cost allocation

 

methodology that reflects actual costs. Appropriations for the

 

necessary expenses incurred by the department of state in

 

administration and enforcement of sections 801 to 810 of the

 

Michigan vehicle code, 1949 PA 300, MCL 257.801 to 257.810, shall

 

be made from the Michigan transportation fund and from funds money

 

in the transportation administration collection fund created in

 

section 810b of the Michigan vehicle code, 1949 PA 300, MCL

 

257.810b. Appropriations from the Michigan transportation fund for

 

the necessary expenses incurred by department of state in

 

administration and enforcement of sections 801 to 810 of the

 

Michigan vehicle code, 1949 PA 300, MCL 257.801 to 257.810, shall

 

not exceed $20,000,000.00 per state fiscal year. except for the

 

fiscal year ending September 30, 2006. For the fiscal year ending

 

September 30, 2006, the legislature may appropriate funds in excess

 

of $20,000,000.00 from the Michigan transportation fund for all

 

incremental additional expenses incurred by the department of state

 

in enforcing sections 801 to 810 of the Michigan vehicle code, 1949

 

PA 300, MCL 257.801 to 257.810, that arise because of the

 

replacement of standard design registration license plates as

 

provided in section 224 of the Michigan vehicle code, 1949 PA 300,

 

MCL 257.224. All money in the Michigan transportation fund is

 

apportioned and appropriated in the following manner:

 

     (a) Not more than $3,000,000.00 as may be annually

 

appropriated each fiscal year to the state trunk line fund for

 

subsequent deposit in the rail grade crossing account.

 

     (b) Not less than $3,000,000.00 each year to the local bridge

 

fund established in subsection (5) (4) for the purpose of payment

 

of the principal, interest, and redemption premium on any notes or

 

bonds issued by the state transportation commission under former

 

section 11b or subsection (10).(9).

 

     (c) Revenue Except as otherwise provided in this subdivision,

 

$5,000,000.00 each year of the revenue from 3 cents of the tax

 

levied under section 8(1)(a) of the motor fuel tax act, 2000 PA

 

403, MCL 207.1008, to the movable bridge fund created in section

 

11g, with the remainder to the state trunk line fund, county road

 

commissions, and cities and villages in the percentages provided in

 

subdivision (i).(j). The department shall annually adjust the

 

amount allocated under this subdivision by an amount equal to the

 

annual increase in the Detroit consumer price index for the

 

preceding year.

 

     (d) Until September 30, 2004, all of the revenue from 1 cent

 

of the tax levied under section 8(1)(a) of the motor fuel tax act,

 

2000 PA 403, MCL 207.1008, to the state trunk line fund for repair

 

of state bridges under section 11. Beginning October 1, 2004 and

 

continuing through September 30, 2005, 3/4 of the revenue from 1

 

cent of the tax levied under section 8(1)(a) of the motor fuel tax

 

act, 2000 PA 403, MCL 207.1008, shall be appropriated to the state

 

trunk line fund for the repair of state bridges under section 11,

 

and 1/4 of the revenue from 1 cent of the tax levied under section

 

8(1)(a) of the motor fuel tax act, 2000 PA 403, MCL 207.1008, shall

 

be appropriated to the local bridge fund created in subsection (5)

 

for distribution only to cities, villages, and county road

 

commissions. Beginning October 1, 2005, 1/2 One-half of the revenue

 

from 1 cent of the tax levied under section 8(1)(a) of the motor

 

fuel tax act, 2000 PA 403, MCL 207.1008, shall be is appropriated

 

to the state trunk line fund for the repair of state bridges under

 

section 11, and 1/2 of the revenue from 1 cent of the tax levied

 

under section 8(1)(a) of the motor fuel tax act, 2000 PA 403, MCL

 

207.1008, shall be is appropriated to the local bridge fund created

 

in subsection (5) (4) for distribution only to cities, villages,

 

and county road commissions.

 

     (e) $43,000,000.00 to the state trunk line fund for debt

 

service costs on state of Michigan projects.

 

     (f) Except as provided in subsection (4), 10% to the

 

comprehensive transportation fund for the purposes described in

 

section 10e.

 

     (g) $5,000,000.00 to the local bridge fund established in

 

subsection (5) (4) for distribution only to the local bridge

 

advisory board, the regional bridge councils, cities, villages, and

 

county road commissions.

 

     (h) $36,775,000.00 to the state trunk line fund for subsequent

 

deposit in the transportation economic development fund, and, as of

 

September 30, 1997, with first priority for allocation to debt

 

service on bonds issued to fund transportation economic development

 

fund projects. In addition, beginning October 1, 1997,

 

$3,500,000.00 is appropriated from the Michigan transportation fund

 

to the state trunk line fund for subsequent deposit in the

 

transportation economic development fund to be used for economic

 

development road projects in any of the targeted industries

 

described in section 9(1)(a) of 1987 PA 231, MCL 247.909.

 

     (i) Not less than $33,000,000.00 as may be annually

 

appropriated each fiscal year to the local program fund created in

 

section 11e.

 

     (j) The balance of the Michigan transportation fund as

 

follows, after deduction of the amounts appropriated in

 

subdivisions (a) through (i) and section 11b:11g:

 

     (i) 39.1% to the state trunk line fund for the purposes

 

described in section 11.

 

     (ii) 39.1% to the county road commissions of the this state.

 

     (iii) 21.8% to the cities and villages of the this state.

 

     (2) The money appropriated pursuant to this section shall be

 

used for the purposes as provided in this act and any other

 

applicable act. Subject to the requirements of section 9b, the

 

department shall develop programs in conjunction with the Michigan

 

state chamber of commerce and the Michigan minority business

 

development council to assist small businesses, including those

 

located in enterprise zones and those located in empowerment zones

 

as determined under federal law, as defined by law in becoming

 

qualified to bid.

 

     (3) Thirty-one and one-half percent of the funds money

 

appropriated to this state from the federal government pursuant to

 

23 USC 157, commonly known as minimum guarantee funds, shall be

 

allocated to the transportation economic development fund, if such

 

an the allocation is consistent with federal law. These funds This

 

money shall be distributed 16-1/2% for development projects for

 

rural counties as defined by law and 15% for capacity improvement

 

or advanced traffic management systems in urban counties as defined

 

by law. Federal funds money allocated for distribution under this

 

section shall be is eligible for obligation and use by all

 

recipients as defined by the transportation equity act for the 21st

 

century, Public Law 105-178.

 

     (4) For the fiscal year beginning October 1, 2003 only, the

 

apportionment of 10% of Michigan transportation fund money to the

 

comprehensive transportation fund as provided in subsection (1)(f)

 

shall be reduced by $10,000,000.00 and the $10,000,000.00 shall be

 

transferred to the state trunk line fund for capacity improvements

 

to state trunk line highways.

 

     (4) (5) A fund to be known as the local bridge fund is

 

established and is set up and maintained in the state treasury as a

 

separate fund. The money appropriated to the local bridge fund and

 

the interest accruing to that fund shall be expended for the local

 

bridge program. The purpose of the fund is to provide financial

 

assistance to highway authorities for the preservation,

 

improvement, or reconstruction of existing bridges or for the

 

construction of bridges to replace existing bridges in whole or

 

part. The money in the local bridge fund is not subject to section

 

12(15) or 13(5). The local bridge advisory board is created and

 

shall consist of 6 voting members appointed by the state

 

transportation commission and 2 nonvoting members appointed by the

 

state transportation department. The board shall include 3 members

 

from the county road association of Michigan, 1 member who

 

represents counties with populations 65,000 or greater, 1 member

 

who represents counties with populations greater than 30,000 and

 

less than 65,000, and 1 member who represents counties with

 

populations of 30,000 or less. Three members shall be appointed

 

from the Michigan municipal league, 1 member who represents cities

 

with a population 75,000 or greater, 1 member who represents cities

 

with a population less than 75,000, and 1 member who represents

 

villages. Each organization with voting rights shall submit a list

 

of nominees in each population category to the state transportation

 

commission. The state transportation commission shall make the

 

appointments from the lists submitted under this subsection. Names

 

shall be submitted within 45 days after October 1, 2004. The state

 

transportation commission shall make the appointments by January

 

30, 2005. Voting members shall be appointed for 2 years. The

 

chairperson of the board shall be selected from among the voting

 

members of the board. In addition to the 2 nonvoting members, the

 

department shall provide qualified administrative staff and

 

qualified technical assistance to the board.

 

     (5) (6) Beginning October 1, 2005, no No less than 5% and no

 

more than 15% of the funds money received in the local bridge fund

 

may be used for critical repair of large bridges and emergencies as

 

determined by the local bridge advisory board. Beginning October 1,

 

2005, funds Money remaining after the funds money allocated for

 

critical large bridge repair and emergencies are is deducted shall

 

be distributed by the board to the regional bridge councils created

 

under this section. One regional council shall be formed for each

 

department of transportation region as those regions exist on

 

October 1, 2004. The regional councils shall consist of 2 members

 

of the county road association of Michigan from counties in the

 

region, 2 members of the Michigan municipal league from cities and

 

villages in the region, and 1 member of the state transportation

 

department in each region. The members of the state transportation

 

department shall be are nonvoting members who shall provide

 

qualified administrative staff and qualified technical assistance

 

to the regional councils.

 

     (6) (7) Beginning October 1, 2005, funds Money in the local

 

bridge fund after deduction of the amounts set aside for critical

 

repair of large bridges and emergency repairs shall be distributed

 

among the regional bridge councils according to all of the

 

following ratios, which shall be assigned a weight expressed as a

 

percentage as determined by the board, with each ratio receiving no

 

greater than a 50% weight and no less than a 25% weight:

 

     (a) A ratio with a numerator that is the total number of local

 

bridges in the region and a denominator that is the total number of

 

local bridges in this state.

 

     (b) A ratio with a numerator that is the total local bridge

 

deck area in the region and a denominator that is the total local

 

bridge deck area in this state.

 

     (c) A ratio with a numerator that is the total amount of

 

structurally deficient local bridge deck area in the region and a

 

denominator that is the total amount of structurally deficient

 

local bridge deck area in this state.

 

     (7) (8) Beginning October 1, 2005, the The regional bridge

 

councils shall allocate the funds money received from the board for

 

the preservation, improvement, and reconstruction of existing

 

bridges or for the construction of bridges to replace existing

 

bridges in whole or in part in each region.

 

     (8) (9) Beginning January 1, 2007 and each Each January, after

 

2007, the department shall submit a report to the chair and the

 

minority vice-chair of the appropriations committees of the senate

 

and the house of representatives, and to the standing committees on

 

transportation of the senate and the house of representatives, on

 

all of the following activities for the previous state fiscal year:

 

     (a) A listing of how much money was dedicated for emergency

 

and large bridge repair.

 

     (b) A listing of what the emergency and large bridge repair

 

projects that were funded.

 

     (c) The actual weights used in the calculation required under

 

subsection (7).(6).

 

     (d) A listing of the total money distributed to each region.

 

     (e) A listing of what the specific projects that were funded

 

pursuant to subsection (8).(7).

 

     (9) (10) The state transportation commission shall borrow

 

money and issue notes or bonds in an amount of not less than

 

$30,000,000.00 to supplement the funding provided for the local

 

bridge program under subsection (6). (5). The bonds or notes issued

 

pursuant to this subsection may be issued by the commission for any

 

purpose for which other local bridge funds money may be used under

 

this section. The bonds or notes authorized by this subsection

 

shall be issued by resolution of the state transportation

 

commission consistent with the requirements of section 18b.

 

     (10) (11) The state transportation department shall promulgate

 

rules pursuant to the administrative procedures act of 1969, 1969

 

PA 306, MCL 24.201 to 24.328, governing the administration of the

 

local bridge program. The rules shall set forth the eligibility

 

criteria for financial assistance under the program and other

 

matters related to the program that the department considers

 

necessary and desirable. The department shall take into

 

consideration the availability of federal aid and other financial

 

resources of the highway authority responsible for the bridge, the

 

importance of the bridge to the highway, road, or street network,

 

and the condition of the existing bridge.

 

     (11) (12) Beginning October 1, 2004, the revenue The money

 

appropriated to the local bridge fund pursuant to subsection (1)(d)

 

shall be distributed only to the local bridge advisory board, the

 

regional bridge councils, cities, villages, and county road

 

commissions.

 

     (12) (13) Beginning October 1, 2008, the The regional bridge

 

councils shall determine what the bridge projects that are selected

 

for funding from the local bridge fund created in subsection (5)

 

(4) and shall make a list of selected projects available to

 

interested parties in the region. A determination that a bridge

 

project is selected for funding in a given fiscal year is not

 

approval to disburse the funds.money.

 

     (13) (14) Beginning October 1, 2008, a A county road

 

commission, city, or village may implement a bridge project if the

 

bridge project has been selected for funding and is included in the

 

appropriate regional bridge council's current multiyear bridge plan

 

for the local bridge program but the regional bridge council has

 

not allocated funds money to the bridge project for the fiscal year

 

that the bridge project is on the current multiyear bridge plan. A

 

county road commission, city, or village may borrow funds money to

 

implement a project that has been selected for funding and is

 

included in the appropriate regional bridge council's current

 

multiyear bridge plan but has not been allocated funds money by the

 

regional bridge council. Based on available local bridge funds,

 

money, when a bridge project that was implemented with borrowed

 

funds money is allocated funding in a subsequent fiscal year, the

 

funding shall only be used to repay the amount approved by the

 

multiyear bridge plan when the funds were money was borrowed. To be

 

eligible for repayment of the amount borrowed, a bridge project

 

that has been implemented with borrowed funds money shall be

 

administered through the department's local bridge program.

 

     Sec. 11g. (1) The movable bridge fund is created in the state

 

treasury as a separate fund. The state treasurer may receive money

 

or other assets from any source for deposit into the fund. The

 

state treasurer shall direct the investment of the fund. The state

 

treasurer shall credit to the fund interest and earnings from fund

 

investments. Money in the fund at the close of the fiscal year

 

shall remain in the fund and shall not lapse to the general fund.

 

The department shall be the administrator of the fund for auditing

 

purposes.

 

     (2) The department may enter into a contract with a person or

 

agency that has jurisdiction of a publicly owned movable bridge for

 

the operation of that bridge. A contract entered into under this

 

subsection shall require any contractor hired by the department to

 

operate the bridge to maintain insurance in an amount specified by

 

the department. This subsection does not require the department to

 

assume ownership or jurisdiction of a publicly owned movable bridge

 

as part of a contract described in this subsection.

 

     (3) Each person or agency other than the department that owns

 

or has jurisdiction of a publicly owned movable bridge shall submit

 

to the department the operational procedures for that bridge and

 

the operational costs incurred by the person or agency in operating

 

the bridge on an annual basis. The department shall develop

 

procedures to govern the operation of and to determine the

 

operational costs of all publicly owned movable bridges in this

 

state. The department shall annually develop an estimate for the

 

operational cost of each publicly owned movable bridge in this

 

state for each fiscal year. For each publicly owned movable bridge

 

that is owned by or under the jurisdiction of a person or agency

 

other than the department, the department shall use the operational

 

procedures and operational costs submitted by that person or agency

 

under this subsection in developing the procedures and estimate

 

required by this subsection. Using the estimates developed under

 

this subsection, the department shall distribute a percentage of

 

money from the movable bridge fund to each person or agency

Senate Bill No. 281 as amended November 13, 2014           (1 of 6)

 

responsible for the operation of a publicly owned movable bridge.

 

If the department is responsible for the operation of a publicly

 

owned movable bridge, the money distributed under this subsection

 

shall be distributed to the department.

 

     (4) If the department offers to enter into a contract

 

described in subsection (2) and the owner or agency that has

 

jurisdiction of the bridge declines, the owner or agency shall

 

continue to receive the amount of money that it otherwise would

 

have received for the operation of that bridge under this act.

 

     (5) As used in this section, "operational costs" includes all

 

reasonable and customary costs associated with the operation of a

 

publicly owned moveable bridge. Operational costs do not include

 

routine maintenance costs, capital improvement costs, or emergency

 

structural, mechanical, electrical, or hydraulic repairs.

     <<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 funds 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 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 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 for use on the

major and local street systems respectively and shall be subject to

the same provisions as funds 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 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 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 funds have

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 funds 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 funds may be expended for the development,

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

construction or repair of street lighting, and 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 funds 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 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 state. The payment of the principal and interest upon bonds

issued by a city or village pursuant to 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 state for local

street system support. Funds 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 the state under the state constitution of 1963 and statutes of

the state, from funds 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 shall be 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 funds may be transferred for

preservation of the local street system. Major street funds

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 funds on the local and major street systems.

     (8) Not more than 10% per year of all of the funds 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 funds are 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 to be designated by the

governing body who shall be responsible for and shall represent the

municipality in transactions with the department pursuant to 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 funds 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 funds 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 funds

expended under this section were 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) 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.

     (14) (13) 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) "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 funds

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

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