SB-0981, As Passed Senate, December 13, 2007

SUBSTITUTE FOR

SENATE BILL NO. 981

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 the title and section 11 (MCL 247.661), the title as

amended by 2004 PA 384 and section 11 as amended by 2002 PA 639.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

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 make appropriations; 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.

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 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

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 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

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 contracts authorized by section 18d.

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

10(1)(g) 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.

10(1)(a) to the railroad 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 state, counties, cities, or villages.

Projects shall be selected 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 this subdivision

for rail grade crossing improvements and retirement shall be 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 be negotiated between the

road authority and railroad company. The funds provided to the road

authority as a result of the crossing closure will 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) Beginning for the state fiscal year that starts October 1,

2008, not less than $5,250,000.00 annually appropriated to the

Mackinac bridge authority created in section 2 of 1950 (Ex Sess) PA

21, MCL 254.302, to be used for capital improvement purposes.

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

bridges.

(g) ~~(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 in the state trunk line fund 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.

(h) ~~(g)~~ The state transportation department may enter into

agreements with county road commissions and with cities and

villages to perform work on a highway, road, or street. The

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

village to pay their costs of improving railroad 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 state to the

county road commission, city, or village.

(i) ~~(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 any other provision of this act, 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. 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 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 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.

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 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 section 10(1)(g) and 10(1)(a).

(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 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. The

requirement of this subsection shall be 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 county road

commissions, cities, and villages 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 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)~~ (g). 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 road commissions, cities, and villages 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 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 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 made pursuant to 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 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

interest rates and payment schedules of any loans made from the

proceeds of bonds or notes issued pursuant to 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 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 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 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 state to

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

city, or village, 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 to county road commissions, cities, and

villages 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 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 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 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 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.

(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)~~ (1)(h) 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.

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 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.