Bill Text: MI HB5641 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Transportation; funds; use of road funds by the state transportation department, counties, cities, and villages; modify to require all money to be spent on preservation projects until the asset management council determines that all roads in this state are in at least fair condition. Amends secs. 11, 12 & 13 of 1951 PA 51 (MCL 247.661 et seq.).

Spectrum: Slight Partisan Bill (Democrat 11-5)

Status: (Introduced - Dead) 2014-06-11 - Printed Bill Filed 06/11/2014 [HB5641 Detail]

Download: Michigan-2013-HB5641-Introduced.html

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HOUSE BILL No. 5641

 

June 10, 2014, Introduced by Reps. Townsend, Yonker, Victory, Farrington, Dianda, Schor, Driskell, Switalski, Cochran, Pagel, Lauwers, Zemke, Stallworth, Talabi, Irwin and Barnett and referred to the Committee on Transportation and Infrastructure.

 

     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 11, 12, and 13 (MCL 247.661, 247.662, and

 

247.663), section 11 as amended by 2002 PA 639 and sections 12 and

 

13 as amended by 2012 PA 298.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 11. (1) A fund to be known as the state trunk line fund

 

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

 

treasury as a separate fund. The money deposited in the state trunk

 

line fund is appropriated to the state transportation department

 

for the following purposes in the following order of priority:

 

     (a) For the payment, but only from money restricted as to use

 

by section 9 of article IX of the state constitution of 1963, of

 

bonds, notes, or other obligations in the following order of

 

priority:

 

     (i) For the payment of contributions pledged before July 18,

 

1979 and required to be made by the state highway commission or the

 

state transportation commission under contracts entered into before

 

July 18, 1979, under 1941 PA 205, MCL 252.51 to 252.64, which

 

contributions have been pledged before July 18, 1979, for the

 

payment of the principal and interest on bonds issued under 1941 PA

 

205, MCL 252.51 to 252.64, for the payment of which a sufficient

 

sum is irrevocably appropriated.

 

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

 

designated "State of Michigan, State Highway Commissioner, Highway

 

Construction Bonds, Series I", dated September 1, 1956, in the

 

aggregate principal amount of $25,000,000.00, issued pursuant to

 

under former 1955 PA 87 and the resolution of the state

 

administrative board adopted August 6, 1956, for the payment of

 

which a sufficient sum is irrevocably appropriated.

 

     (iii) For the payment of the principal and interest on bonds

 

issued under section 18b for transportation purposes other than

 

comprehensive transportation purposes as defined by law and the

 

payment of contributions of the state highway commission or state

 

transportation commission to be made pursuant to under contracts

 

entered into under section 18d, which contributions are pledged to

 

the payment of principal and interest on bonds issued under the

 

authorization of section 18d and contracts executed pursuant to

 

under that section. A sufficient portion of the fund is irrevocably

 

appropriated to pay, when due, the principal and interest on bonds

 

or notes issued under section 18b for purposes other than

 

comprehensive transportation purposes as defined by law, and to pay

 

the annual contributions of the state highway commission and the

 

state transportation commission as are pledged for the payment of

 

bonds issued pursuant to under contracts authorized by section 18d.

 

     (b) For the transfer of funds appropriated pursuant to under

 

section 10(1)(g) 10(1)(h) to the transportation economic

 

development fund, but the transfer shall be reduced each fiscal

 

year by the amount of debt service to be paid in that year from the

 

state trunk line fund for bonds, notes, or other obligations issued

 

to fund projects of the transportation economic development fund,

 

which amount shall be certified by the department.

 

     (c) For the transfer of funds appropriated pursuant to under

 

section 10(1)(a) to the railroad rail grade crossing account in the

 

state trunk line fund for expenditure for rail grade crossing

 

improvement purposes at rail grade crossings on public roads and

 

streets under the jurisdiction of the this state, counties, cities,

 

or villages. Projects The department shall be selected select

 

projects for funding in accordance with the following:

 

     (i) Not more than 50% or less than 30% of these funds and

 

matched federal funds shall be expended for state trunk line

 

projects.

 

     (ii) In prioritizing projects for these funds, in whole or in

 

part, the department shall consider train and vehicular traffic

 

volumes, accident history, traffic control device improvement

 

needs, and the availability of funding.

 

     (iii) Consistent with the other requirements for these funds,

 

the first priority for funds deposited pursuant to under this

 

subdivision for rail grade crossing improvements and retirement

 

shall be is to match federal funds from the railroad-highway grade

 

crossing improvement program or other comparable federal programs

 

if a match is required under federal law.

 

     (iv) If the department and the road authority with jurisdiction

 

over the crossing formally agree that the grade crossing should be

 

eliminated by permanent closing of the public road or street, the

 

physical removal of the crossing, roadway within railroad rights of

 

way, and street termination treatment will shall be negotiated

 

between the road authority and railroad company. The funds provided

 

to the road authority as a result of the crossing closure will

 

shall be credited to its account representing the same road or

 

street system on which the crossing is located and shall be used

 

for any transportation purpose within that road authority's

 

jurisdiction.

 

     (d) For the total operating expenses of the state trunk line

 

fund for each fiscal year as appropriated by the legislature.

 

     (e) For the preservation of state trunk line highways and

 

bridges.

 

     (f) For the opening, widening, improving, construction, and

 

reconstruction of state trunk line highways and bridges, including

 

the acquisition of necessary rights of way and the work incidental

 

to that opening, widening, improving, construction, or

 

reconstruction. Those sums The department shall use sums in the

 

state trunk line fund that are not otherwise appropriated,

 

distributed, determined, or set aside by law shall be used for the

 

construction or reconstruction of the national system of interstate

 

and defense highways, referred to in this act as "the interstate

 

highway system" to the extent necessary to match federal aid funds

 

as the federal aid funds become available for that purpose; and,

 

for the construction and reconstruction of the state trunk line

 

system.

 

     (g) The state transportation department may enter into

 

agreements an agreement with a county road commissions and with

 

cities and villages commission, city, or village to perform work on

 

a highway, road, or street. The agreements agreement may provide

 

for the performance by any of the contracting parties of any of the

 

work contemplated by the contract including engineering services

 

and the acquisition of rights of way in connection with the work,

 

by purchase or condemnation by any of the contracting parties in

 

its own name, and for joint participation in the costs, but only to

 

the extent that the contracting parties are otherwise authorized by

 

law to expend money on the highways, roads, or streets. The state

 

transportation department also may contract with a county road

 

commission, city, and or village to advance money to a county road

 

commission, city, and or village to pay their its costs of

 

improving railroad rail grade crossings on the terms and conditions

 

agreed to in the contract. A contract may be executed before or

 

after the state transportation commission borrows money for the

 

purpose of advancing money to a county road commission, city, or

 

village, but the contract shall be executed before the advancement

 

of any money to a county road commission, city, or village by the

 

state transportation commission, and shall provide for the full

 

reimbursement of any advancement by a county road commission, city,

 

or village to the state transportation department, with interest,

 

within 15 years after advancement, from any available revenue

 

sources of the county road commission, city, or village or, if

 

provided in the contract, by deduction from the periodic

 

disbursements of any money returned by the this state to the county

 

road commission, city, or village.

 

     (h) For providing inventories of supplies and materials

 

required for the activities of the state transportation department.

 

The state transportation department may purchase supplies and

 

materials for these purposes, with payment to be made out of the

 

state trunk line fund to be charged on the basis of issues from

 

inventory in accordance with the accounting and purchasing laws of

 

this state.

 

     (2) Notwithstanding Except as otherwise provided in this

 

subsection and notwithstanding any other provision of this act, the

 

department shall expend annually at least 90% of state revenue

 

appropriated annually to the state trunk line fund less the amounts

 

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

 

the state transportation department for the preservation of

 

highways, roads, streets, and bridges and for the payment of debt

 

service on bonds, notes, or other obligations described in

 

subsection (1)(a) issued after July 1, 1983, for the purpose of

 

providing funds for the preservation of highways, roads, streets,

 

and bridges. Beginning on the effective date of the 2014 amendatory

 

act that amended this subsection and ending when the asset

 

management council determines that all highways, roads, streets,

 

and bridges in this state that are within the jurisdiction of the

 

department are in at least fair condition, the department shall

 

expend annually all of the state revenue appropriated annually to

 

the state trunk line fund less the amounts described in

 

subdivisions (a) to (i) for the preservation of highways, roads,

 

streets, and bridges and for the payment of debt service on bonds,

 

notes, or other obligations described in subsection (1)(a) issued

 

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

 

preservation of highways, roads, streets, and bridges. Of the

 

amounts appropriated for state trunk line projects, the department

 

shall, where possible, secure warranties of not less than 5-year

 

full replacement guarantee for contracted construction work. If an

 

appropriate certificate is filed under section 18e but only to the

 

extent necessary, this subsection shall does not prohibit the use

 

of any amount of money restricted as to use by section 9 of article

 

IX of the state constitution of 1963 and deposited in the state

 

trunk line fund for the payment of debt service on bonds, notes, or

 

other obligations pledging for the payment thereof of that debt

 

service money restricted as to use by section 9 of article IX of

 

the state constitution of 1963 and deposited in the state trunk

 

line fund, whenever issued, as specified under subsection (1)(a).

 

The amounts which that are deducted from the state trunk line fund

 

for the purpose of the calculation required by this subsection are

 

as follows:

 

     (a) Amounts expended for the purposes described in subsection

 

(1)(a) for the payment of debt service on bonds, notes, or other

 

obligations issued before July 2, 1983.

 

     (b) Amounts expended to provide the state matching requirement

 

for projects on the national highway system and for the payment of

 

debt service on bonds, notes, or other obligations issued after

 

July 1, 1983, for the purpose of providing funds for the state

 

matching requirements for projects on the national highway system.

 

     (c) Amounts expended for the construction of a highway,

 

street, road, or bridge to 1 or more of the following or for the

 

payment of debt service on bonds, notes, or other obligations

 

issued after July 1, 1983, for the purpose of providing funds for

 

the construction of a highway, street, road, or bridge to 1 or more

 

of the following:

 

     (i) A location for which a building permit has been obtained

 

for the construction of a manufacturing or industrial facility.

 

     (ii) A location for which a building permit has been obtained

 

for the renovation of, or addition to, a manufacturing or

 

industrial facility.

 

     (d) Amounts expended for capital outlay other than for

 

highways, roads, streets, and bridges or to pay debt service on

 

bonds, notes, or other obligations issued after July 1, 1983, for

 

the purpose of providing funds for capital outlay other than for

 

highways, roads, streets, and bridges.

 

     (e) Amounts expended for the operating expenses of the state

 

transportation department other than the units of the department

 

performing the functions assigned on January 1, 1983 to the bureau

 

of highways.

 

     (f) Amounts expended pursuant to under contracts entered into

 

before January 1, 1983.

 

     (g) Amounts expended for the purposes described in subsection

 

(5).

 

     (h) Amounts appropriated for deposit in the transportation

 

economic development fund and the rail grade crossing account

 

pursuant to under section 10(1)(g) and 10(1)(a).10(1)(a) and (h).

 

     (i) Upon the affirmative recommendation of the director of the

 

state transportation department and the approval by resolution of

 

the state transportation commission, those amounts expended for

 

projects vital to the economy of this state, a region, or local

 

area or the safety of the public. The resolution shall state the

 

cost of the project exempted from this subsection.

 

     (3) Notwithstanding Except as otherwise provided in this

 

subsection and notwithstanding any other provision of this act, the

 

state transportation department shall expend annually at least 90%

 

of the federal revenue distributed to the credit of the state trunk

 

line fund in that year, except for federal revenue expended for the

 

purposes described in subsection (2)(b), (c), (f), and (i) and for

 

the payment of notes issued under section 18b(9) on the

 

preservation of highways, roads, streets, and bridges. Beginning on

 

the effective date of the 2014 amendatory act that amended this

 

subsection and ending when the asset management council determines

 

that all highways, roads, streets, and bridges in this state that

 

are within the jurisdiction of the department are in at least fair

 

condition, the department shall expend annually all of the federal

 

revenue distributed to the credit of the state trunk line fund in

 

that year, except for federal revenue expended for the purposes

 

described in subsection (2)(b), (c), (f), and (i) and for the

 

payment of notes issued under section 18b(9), on the preservation

 

of highways, roads, streets, and bridges. The requirement

 

requirements of this subsection shall be are waived if compliance

 

would cause this state to be ineligible according to federal law

 

for federal revenue, but only to the extent necessary to make this

 

state eligible according to federal law for that revenue.

 

     (4) Notwithstanding any other provision of this section, the

 

state transportation department may loan money to a county road

 

commissions, cities, and villages commission, city, or village for

 

paying capital costs of transportation purposes described in the

 

second paragraph of section 9 of article IX of the state

 

constitution of 1963 from the proceeds of bonds or notes issued

 

pursuant to under section 18b or from the state trunk line fund.

 

Loans made directly from the state trunk line fund shall be made

 

only after provision of funds for the purposes specified in

 

subsection (1)(a) to (f). Loans described in this subsection are

 

not subject to the revised municipal finance act, 2001 PA 34, MCL

 

141.2101 to 141.2821.

 

     (5) County A county road commissions, cities, and villages

 

commission, city, or village may borrow money from the proceeds of

 

bonds or notes issued under section 18b or the state trunk line

 

fund for the purposes set forth in subsection (4) that shall be

 

repayable, with interest, from 1 or more of the following:

 

     (a) The money to be received by the county road commission,

 

city, or village from the Michigan transportation fund, except to

 

the extent the money has been or may in the future be pledged by

 

contract in accordance with 1941 PA 205, MCL 252.51 to 252.64, or

 

has been or may in the future be pledged for the payment of the

 

principal and interest upon notes issued pursuant to under 1943 PA

 

143, MCL 141.251 to 141.254, or has been or may in the future be

 

pledged for the payment of principal and interest upon bonds issued

 

under section 18c or 18d, or has been or may in the future be

 

pledged for the payment of the principal and interest upon bonds

 

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

 

     (b) Any other legally available funds of the city, village, or

 

county road commission, other than the general funds of the county.

 

     (6) Loans A loan made pursuant to under subsection (4) if

 

required by the state transportation department may be payable by

 

deduction by the state treasurer, upon direction of the state

 

transportation department, from the periodic disbursements of any

 

money returned by the this state under this act to the county road

 

commission, city, or village, but only after sufficient money has

 

been returned to the county road commission, city, or village to

 

provide for the payment of contractual obligations incurred or to

 

be incurred and principal and interest on notes and bonds issued or

 

to be issued under 1941 PA 205, MCL 252.51 to 252.64, 1943 PA 143,

 

MCL 141.251 to 141.254, 1952 PA 175, MCL 247.701 to 247.707, or

 

section 18c or 18d. The department shall establish the interest

 

rates and payment schedules of any a loans made from the proceeds

 

of bonds or notes issued pursuant to under section 18b shall be

 

established by the state transportation department to conform as

 

closely as practicable to the interest rate and repayment schedules

 

on the bonds or notes issued to make the loans. However, the state

 

transportation department may allow for the deferral of the first

 

payment of interest or principal on the loans for a period of not

 

to exceed 1 year after the respective first payment of interest or

 

principal on the bonds or notes issued to make the loans.

 

     (7) The amount borrowed by a county road commission, city, or

 

village pursuant to under subsection (5) shall not be included in,

 

or charged against, any constitutional, statutory, or charter debt

 

limitation of the county, city, or village and shall not be

 

included in the determination of the maximum annual principal and

 

interest requirements of, or the limitations upon, the maximum

 

annual principal and interest incurred under 1941 PA 205, MCL

 

252.51 to 252.64, 1943 PA 143, MCL 141.251 to 141.254, 1952 PA 175,

 

MCL 247.701 to 247.707, or section 18c or 18d.

 

     (8) The A county road commission, city, or village is not

 

required to seek or obtain the approval of the electors, the

 

municipal finance commission or its successor agency, or, except as

 

provided in this subsection, the department of treasury to borrow

 

money pursuant to under subsection (5). The borrowing is not

 

subject to the revised municipal finance act, 2001 PA 34, MCL

 

141.2101 to 141.2821, or to section 5(g) of the home rule city act,

 

1909 PA 279, MCL 117.5. The state transportation department shall

 

give at least 10 days' notice to the state treasurer of its

 

intention to make a loan under subsection (4). If the state

 

treasurer gives notice to the director of the state transportation

 

department within 10 days of receiving the notice from the state

 

transportation department, that, based upon the then existing

 

financial or credit situation of the county road commission, city,

 

or village, it would not be in the best interests of the this state

 

to make a loan under subsection (4) to the county road commission,

 

city, or village, the department shall not make the loan shall not

 

be made unless the state treasurer, after a hearing, if requested

 

by the affected county road commission, city, or village,

 

subsequently gives notice to the director of the state

 

transportation department that the loan may be made on the

 

conditions that the state treasurer specifies.

 

     (9) The state transportation commission may borrow money and

 

issue bonds and notes under , and pursuant to the requirements of,

 

section 18b to make loans a loan to a county road commissions,

 

cities, and villages commission, city, or village for the purposes

 

described in the second paragraph of section 9 of article IX of the

 

state constitution of 1963, as provided in subsection (4). A single

 

issue of bonds or notes may be issued for the purposes specified in

 

subsection (4) and for the other purposes specified in section 18b.

 

The department shall notify the house and senate transportation

 

appropriations subcommittees shall be notified by the department if

 

there are extras and overruns sufficient to require approval of

 

either the state administrative board or the commission, or both,

 

on any contract between the department and a local road agency or a

 

private business.

 

     (10) The director of the state transportation department,

 

after consultation with representatives of the interests of county

 

road commissions, cities, and villages, shall establish, by

 

intergovernmental communication, procedures for the implementation

 

and administration of the loan program established under

 

subsections (4) to (9).

 

     (11) Not The department shall not expend more than 10% per

 

year of all of the funds received by and returned to the state

 

transportation department from any source for the purposes of this

 

section may be expended for administrative expenses. The department

 

shall be subject to section 14(5) if it expends more than 10% per

 

year is 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 preservation projects and are often referred to as

 

general or supportive services. Administrative expenses shall do

 

not include net equipment expense, net capital outlay, debt service

 

principal and interest, and payments to other state or local

 

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

 

construction projects or preservation activities.

 

     (12) Any performance audits of the department shall be

 

conducted according to government auditing standards issued by the

 

United States general accounting office.

 

     (13) Contracts entered into to advance money to a county road

 

commission, city, or village under subsection (1)(g) are not

 

subject to the revised municipal finance act, 2001 PA 34, MCL

 

141.2101 to 141.2821.

 

     (14) As used in this section, "rail grade crossing improvement

 

purposes" means 1 or more of the following:

 

     (a) The installation and modernization of active and passive

 

warning devices at railroad grade crossings.

 

     (b) The installation or improvement of grade crossing

 

surfaces.

 

     (c) Modification, relocation, or modernization of railroad

 

grade crossing active and passive warning devices necessitated by

 

roadway improvement projects.

 

     (d) Test installations of innovative warning devices or other

 

innovative applications.

 

     (e) Construction of new grade separations.

 

     (f) A cash incentive payment made pursuant to under subsection

 

(1)(c)(iv) for any public road or street crossing, in an amount no

 

greater than the cost of installing flashing light signals and half

 

roadway gates at the crossing.

 

     (g) Any other work that would be eligible for funding under

 

the federal railroad-highway grade crossing improvement program or

 

other comparable programs.

 

     Sec. 12. (1) The department shall return 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 The department shall reimburse 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

 

department shall return 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 The department shall withhold annually 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 department shall

 

return that amount shall be returned to the county road commissions

 

for snow removal purposes as provided in section 12a.

 

     (4) An The department shall return 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 The department shall distribute this sum shall be

 

distributed pursuant to under 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 The department shall return 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 The county road commissions shall expend the money returned to

 

the county road commissions as provided in them 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 The amount returned under this

 

subsection is in addition to the amounts provided in subsection

 

(7).

 

     (6) Seventy-five percent Each county road commission shall

 

expend 75% 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 the department shall be returned return the amount

 

described in this subsection 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 this state.

 

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

 

each county.

 

     (7) The Each county road commission shall expend 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 the department shall be returned

 

return the amount described in this subsection 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 A county road commission shall expend money

 

deposited in , or becoming a part of the county road funds of a the

 

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 under 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

 

its provisions.under 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 funds 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, 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 A county shall expend not less than 20% per year of

 

the funds returned to a that 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 A county may

 

expend surplus funds may be expended for the development,

 

construction, or repair of an off-street parking facility.

 

     (11) Not A county shall not expend more than 5% per year of

 

the funds returned to a that 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 A county road commission shall expend funds

 

returned to a county shall be expended by the county road

 

commission for the purposes provided in this section, and the

 

county treasurer shall be deposited by the county treasurer deposit

 

the funds in a designated county depository, in a separate account

 

to the credit of the county road fund, and shall be paid pay the

 

funds 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 funds are returned under this

 

section, 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

 

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 A county may expend 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, a county may expend 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 Except as otherwise provided in this

 

subsection and notwithstanding any other provision of this act, a

 

county road commission shall expend annually 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. Beginning on the effective

 

date of the 2014 amendatory act that amended this subsection and

 

ending when the asset management council determines that all

 

highways, roads, streets, and bridges in this state that are within

 

the jurisdiction of the county road commission of this state are in

 

at least fair condition, all of the state revenue returned annually

 

to a 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 (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

 

The governing body over the county road commission or the county

 

road commission shall immediately forward 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 Except as otherwise provided in this subsection, 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. Beginning on the

 

effective date of the 2014 amendatory act that amended this

 

subsection and ending when the asset management council determines

 

that all highways, roads, streets, and bridges in this state that

 

are within the jurisdiction of the county road commission of this

 

state are in at least fair condition, a county road commission

 

shall expend annually all of the federal revenue distributed to the

 

county road commission in that year on the preservation of

 

highways, roads, streets, and bridges. 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 those

 

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 under 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 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 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 to be 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 A county may not expend more than 10% per year of all

 

of the funds received by and returned to a that 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 the department of treasury grants 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 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 The department

 

shall conduct 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 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 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 department

 

shall provide 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.

 

     Sec. 13. (1) The department shall return to the treasurers of

 

the cities and villages 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 department shall add 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 this state. Major The

 

department shall determine 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, the department shall withhold 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 department shall use 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 department shall make the distributions

 

shall be made annually during February and shall be calculated

 

calculate the distributions separately for the major and local

 

street systems, but the department may be paid pay the

 

distributions 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 The department shall

 

determine 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

 

department shall proportionately reduce the distributions to each

 

eligible city and village. shall be reduced proportionately. If the

 

sum is less than the amount withheld, the department shall add 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 are subject to the same

 

provisions as funds returned under subsections (3) and (4).

 

     (3) Seventy-five percent The department shall return 75% 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 Each city and village shall use 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 under 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 A city or village shall not expend more than 5%

 

per year of the funds returned to a that city or village by this

 

subsection shall be expended for the preservation or acquisition of

 

appurtenant roadside parks and motor parkways. Surplus A city or

 

village may expend 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 Except as otherwise provided in subsection (8), 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

 

department shall return 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. Funds A city or village shall not expend

 

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 this state under

 

the state constitution of 1963 and statutes of the this 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 A city or village shall expend 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 A city or

 

village shall expend money returned for expenditure on the major

 

street system shall be expended in the priority order provided in

 

subsection (3) except that the city or village may transfer surplus

 

funds may be transferred for preservation of the local street

 

system. Major A city or village shall not use major street funds

 

transferred for use on the local street system shall not be used

 

for construction but the city or village may be used use those

 

funds 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) Notwithstanding any other provision of this act, beginning

 

on the effective date of the amendatory act that added this

 

subsection and ending when the asset management council determines

 

that all highways, roads, streets, and bridges in this state that

 

are within the jurisdiction of the cities and villages of this

 

state are in at least fair condition, all of the state revenue

 

returned annually to a city or village from the Michigan

 

transportation fund less the amounts described in subsections (2)

 

and (3) shall be expended annually by the city or village 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.

 

     (9) (8) Not A city or village shall not expend more than 10%

 

per year of all of the funds returned to a that 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).

 

     (10) (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 under

 

this act.

 

     (11) (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.

 

     (12) (11) Interest A city or village shall credit interest

 

earned on funds returned to a that city or a village for purposes

 

provided in this section shall be credited to the appropriate

 

street fund.

 

     (13) (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

 

The department shall conduct 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.

 

     (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

 

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