May 15, 2008, Introduced by Senators GILBERT, VAN WOERKOM, HARDIMAN and CROPSEY 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 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 12 and 13 (MCL 247.662 and 247.663), section
12 as amended by 2002 PA 498 and section 13 as amended by 2006 PA
338.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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 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 state transportation
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 section 12b. This sum shall be distributed
pursuant to section 12b. The return shall be 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 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 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 the 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 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 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, which contributions 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 to be made pursuant to contracts
entered into under section 18d, which contributions 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 its provisions.
(c) For the payment of principal and interest upon loans
received pursuant to section 11(7), to the extent other funds have
not been made available for that payment.
(9) Not to exceed 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. Not to exceed 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
state transportation department, 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, 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
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 funds 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. Surplus
funds may be expended for the development, construction, or repair
of an off-street parking facility.
(11) Not more than 5% per year of the funds 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) Funds 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 the funds are returned the function
of the county road commission shall be 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
state transportation department with respect to a state trunk line
and connecting links of the state trunk line 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. This
subsection does not apply to section 11b.
(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 funds for the
preservation of highways, roads, streets, and bridges. If an
appropriate certificate is filed under subsection (19) but only to
the extent necessary, this subsection shall 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 which 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
section 12b.
(17) As used in this subsection, "urban routes" means those
portions of 2-lane county primary roads within an urban area which
has 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 expend annually at least 90% of the
federal revenue distributed to the use of the county road
commission for highways, roads, streets, and bridges, less the
amount expended on urban routes for other than preservation
purposes 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 a year
less than 90% of the federal revenue distributed to the use of the
county road commission for highways, roads, streets, and bridges,
less the amount expended on urban routes for other than
preservation purposes 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 use of the county road
commission for highways, roads, streets, and bridges, less the
amount expended on urban routes for 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 a year less than 90% of the federal revenue distributed
to the use of the county road commission for highways, roads,
streets, and bridges, less the amount expended on urban routes for
other than preservation purposes 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 use of the
county road commission for highways, roads, streets, and bridges,
less the amount expended on urban routes for 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, 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 use of
the county road commission for highways, roads, streets, and
bridges, less the amount expended on urban routes for other than
preservation purposes 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 other than preservation purposes 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 waived if compliance would
cause the county road commission to be ineligible according to
federal law for federal revenue, but only to the extent necessary
to make the county road commission eligible according to federal
law for that revenue. For the purpose of the calculations required
by this subsection, the amount expended on urban routes by a county
road commission for other than preservation purposes 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.
(18) A county road commission shall certify, which
certification shall, for purposes of the validity of bonds and
notes, be conclusive as to the matters stated therein, to the state
transportation 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 funds
returned to the county road commission pursuant to 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 such a manner to maintain compliance with the certification
required by this subsection, as of the date the certificate was
originally issued, but no such change shall 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.
(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 to be designated by the county executive who
shall be responsible for and shall represent the charter county in
transactions with the state transportation department pursuant to
this act.
(20) Not more than 10% per year of all of the funds 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
shall be 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 shall not include net equipment expense,
net capital outlay, debt service principal and interest, and
payments to other state or local offices which 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 of treasury shall conduct performance audits
and make investigations of the disposition of all state funds
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 all additional audit procedures and
reporting requirements sufficient to determine whether funds
expended under this section were expended in compliance with this
act by July 1, 2008 and shall report to the transportation
committees of the senate and house of representatives no later than
August 1, 2008 on the additional audit procedures and reporting
requirements. The department of treasury shall provide 6 months
notice to the county road commission or county board of
commissioners, as applicable, of the standards to be used for
audits performed under this subsection prior to the fiscal year in
which the audit is conducted. The department shall notify the
county road commission or county board of commissioners of any
subsequent changes to the standards. County road commissions or
county boards of commissioners, as applicable, shall make available
to the department of treasury the pertinent records for the audit.
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. As used in this section, "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. The amount received by the newly
incorporated municipality shall be in place of any other direct
distribution of funds from the Michigan transportation fund. The
population of the 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
state transportation 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 those cities
and villages located in those 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
shall be ineligible for the winter maintenance payment that is to
be based on that street financial report. The average municipal
winter maintenance factor shall be determined annually by the state
transportation department 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. As used
in this section, "equivalent major mileage" means the sum of 2
times the state trunk line mileage certified by the state
transportation 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:
1.0 for cities and villages of 2,000 or less population;
1.1 for cities and villages from 2,001 to 10,000 population;
1.2 for cities and villages from 10,001 to 20,000 population;
1.3 for cities and villages from 20,001 to 30,000 population;
1.4 for cities and villages from 30,001 to 40,000 population;
1.5 for cities and villages from 40,001 to 50,000 population;
1.6 for cities and villages from 50,001 to 65,000 population;
1.7 for cities and villages from 65,001 to 80,000 population;
1.8 for cities and villages from 80,001 to 95,000 population;
1.9 for cities and villages from 95,001 to 160,000 population;
2.0 for cities and villages from 160,001 to 320,000
population;
and for cities over 320,000 population, by a factor of 2.1
increased successively by 0.1 for each 160,000 population increment
over 320,000. 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, which
contributions 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 state
transportation 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 which 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, and the
construction or repair of street lighting, and transfer to the
local street system under subsection (6).
(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, as defined by this act,
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 that portion
of the city's or village's general obligation bonds which 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 the 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 as defined in
section 10c. 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. As used in this
subsection, "administrative expenses" means those expenses that are
not assigned including, but not limited to, specific road
construction or maintenance projects and are often referred to as
general or supportive services. Administrative expenses shall 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 maintenance activities. A city or village
which in a year expends more than 10% for administrative expenses
shall be 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 state transportation
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 the performance by any of the contracting parties of
the work contemplated by the contracts including services and
acquisition of rights of way, by purchase or condemnation by any of
the contracting parties 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 of treasury shall 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 additional audit
procedures and reporting requirements sufficient to determine
whether funds expended under this section were expended in
compliance with this act by July 1, 2008 and shall report to the
transportation committees of the senate and house of
representatives no later than August 1, 2008 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 of treasury
shall assist cities and villages to assure that road fund balances
are consistently classified. The department of treasury 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 of treasury the
pertinent records for the audit.
(13) On or before October 1, 2008, the department shall
prepare a report listing by city and village, and in total, the
following information:
(a) Amounts transferred between major street fund and local
street fund.
(b) Amounts of local revenue expended on the major street
system. The report shall include fiscal years from January 1, 2002
through June 30, 2008. The report shall analyze the extent to which
the amendatory act that added this subsection affected city and
village transfers from major street funds to local street funds,
and the amount of local revenue expended on city or village major
streets and state trunk lines. The report shall be submitted to the
house and senate appropriations committees and to the house and
senate fiscal agencies.