HB-5007, As Passed Senate, June 14, 2012

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5007

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 10c, 12, and 13 (MCL 247.660c, 247.662, and

247.663), section 10c as amended by 2010 PA 257, section 12 as

amended by 2010 PA 143, and section 13 as amended by 2010 PA 261.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 10c. As used in this act:

(a) "Urban or rural area" means a contiguous developed area,

including the immediate surrounding area, where transportation

services should reasonably be provided presently or in the future;

the area within the jurisdiction of an eligible authority; or for

the purpose of receiving funds for public transportation, a

contiguous developed area having a population of less than 50,000

that has an urban public transportation program approved by the

~~state transportation~~ department and for which the state

transportation commission determines that public transportation

services should reasonably be provided presently or in the future.

(b) "Eligible authority" means an authority organized under

the metropolitan transportation authorities act of 1967, 1967 PA

204, MCL 124.401 to 124.426.

village or an authority created under 1963 PA 55, MCL 124.351 to

124.359; the urban cooperation act of 1967, 1967 (Ex Sess) PA 7,

MCL 124.501 to 124.512; 1967 (Ex Sess) PA 8, MCL 124.531 to

124.536; 1951 PA 35, MCL 124.1 to 124.13; the public transportation

authority act, 1986 PA 196, MCL 124.451 to 124.479; or the revenue

bond act of 1933, 1933 PA 94, MCL 141.101 to 141.140.

(d) "Transit vehicle" means a bus, rapid transit vehicle,

railroad car, street railway car, water vehicle, taxicab, or other

type of public transportation vehicle or individual unit, whether

operated singly or in a group ~~which~~ that provides public

transportation.

(e) "Transit vehicle mile" means a transit vehicle operated

for 1 mile in public transportation service, including demand

actuated and line-haul vehicle miles.

(f) "Demand actuated vehicle" means a bus or smaller transit

vehicle operated for providing group rides to members of the

general public paying fares individually, and on demand rather than

in regularly scheduled route service.

(g) "Demand actuated vehicle mile" means a demand actuated

vehicle operated for 1 mile in service to the general public.

(h) "Public transportation", "comprehensive transportation",

"public transportation service", "comprehensive transportation

service", "public transportation purpose", or "comprehensive

transportation purpose" means the movement of people and goods by

publicly or privately owned water vehicle, bus, railroad car,

street railway, aircraft, rapid transit vehicle, taxicab, or other

conveyance ~~which~~ that provides general or special service to the

public, but not including charter or sightseeing service or

transportation ~~which~~ that is exclusively for school purposes.

Public transportation, public transportation services, or public

transportation purposes; and comprehensive transportation,

comprehensive transportation services, or comprehensive

transportation purposes as defined in this subdivision are declared

by law to be transportation purposes within the meaning of section

9 of article IX of the state constitution of 1963.

(i) "State transportation commission" or "commission" means

the state transportation commission established in section 28 of

article V of the state constitution of 1963.

(j) "Governmental unit" means the state transportation

department, the state transportation commission, a county road

commission, a city, or a village.

(k) "Department" or "department of transportation" or "state

transportation department" means ~~the state transportation~~

~~department,~~ the principal department of state government created

under section 350 of the executive organization act of 1965, 1965

PA 380, MCL 16.450.

(l) "Preservation" means an activity undertaken to preserve the

integrity of the existing roadway system. Preservation does not

include new construction of highways, roads, streets, or bridges, a

project that increases the capacity of a highway facility to

accommodate that part of traffic having neither an origin nor

destination within the local area, widening of a lane width or

more, or adding turn lanes of more than 1/2 mile in length.

Preservation includes, but is not limited to, 1 or more of the

following:

(i) Maintenance.

(ii) Capital preventive treatments.

(iii) Safety projects.

(iv) Reconstruction.

(v) Resurfacing.

(vi) Restoration.

(vii) Rehabilitation.

(viii) Widening of less than the width of 1 lane.

(ix) Adding auxiliary weaving, climbing, or speed change lanes.

(x) Modernizing intersections.

(xi) Adding auxiliary turning lanes of 1/2 mile or less.

(xii) Installing traffic signs in new locations, installing

signal devices in new locations, and replacing existing signal

devices.

(m) "Maintenance" means routine maintenance or preventive

maintenance, or both. Maintenance does not include capital

preventive treatments, resurfacing, reconstruction, restoration,

rehabilitation, safety projects, widening of less than 1 lane

width, adding auxiliary turn lanes of 1/2 mile or less, adding

auxiliary weaving, climbing, or speed-change lanes, modernizing

intersections, or the upgrading of aggregate surface roads to hard

surface roads. Maintenance of state trunk line highways does not

include streetlighting except for freeway lighting for traffic

safety purposes.

(n) "Routine maintenance" means actions performed on a regular

or controllable basis or in response to uncontrollable events upon

a highway, road, street, or bridge. Routine maintenance includes,

but is not limited to, 1 or more of the following:

(i) Snow and ice removal.

(ii) Pothole patching.

(iii) Unplugging drain facilities.

(iv) Replacing damaged sign and pavement markings.

(v) Replacing damaged guardrails.

(vi) Repairing storm damage.

(vii) Repair or operation of traffic signs and signal systems.

(viii) Emergency environmental cleanup.

(ix) Emergency repairs.

(x) Emergency management of road closures that result from

uncontrollable events.

(xi) Cleaning streets and associated drainage.

(xii) Mowing roadside.

(xiii) Control of roadside brush and vegetation.

(xiv) Cleaning roadside.

(xv) Repairing lighting.

(xvi) Grading.

(o) "Preventive maintenance" means a planned strategy of cost-

effective treatments to an existing roadway system and its

appurtenances that preserve assets by retarding deterioration and

maintaining functional condition without significantly increasing

structural capacity. Preventive maintenance includes, but is not

limited to, 1 or more of the following:

(i) Pavement crack sealing.

(ii) Micro surfacing.

(iii) Chip sealing.

(iv) Concrete joint resealing.

(v) Concrete joint repair.

(vi) Filling shallow pavement cracks.

(vii) Patching concrete.

(viii) Shoulder resurfacing.

(ix) Concrete diamond grinding.

(x) Dowel bar retrofit.

(xi) Bituminous overlays of 1-1/2 inches or less in thickness.

(xii) Restoration of drainage.

(xiii) Bridge crack sealing.

(xiv) Bridge joint repair.

(xv) Bridge seismic retrofit.

(xvi) Bridge scour countermeasures.

(xvii) Bridge painting.

(xviii) Pollution prevention.

(xix) New treatments as they ~~may be~~ are developed.

(p) "County road commission" means the board of county road

commissioners elected or appointed pursuant to section 6 of chapter

IV of 1909 PA 283, MCL 224.6, or, in the case of a charter county

with a population of 750,000 or more with an elected county

executive that does not have a board of county road commissioners,

the county executive for ministerial functions and the county

commission provided for in section 14(1)(d) of 1966 PA 293, MCL

45.514, for legislative functions. In addition, if a board of

county road commissioners is dissolved as provided in section 6 of

chapter IV of 1909 PA 283, MCL 224.6, county road commission

includes the county board of commissioners of the county.

(q) "Capital preventive treatments" means any preventive

maintenance category project on state trunk line highways that

qualifies under the department's capital preventive maintenance

program.

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

commissions shall be returned to the county treasurers in the

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

specified in this section. The department and the county road

association of Michigan shall jointly develop incentives for

counties to establish statewide purchasing pools for the more

efficient use of Michigan transportation funds.

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

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

professional engineer employed or retained by the county road

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

county road commission certified by the ~~state transportation~~

department as complying with this subsection regarding the

employment of an engineer.

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

county road commissions from the Michigan transportation fund

during the prior calendar year shall be withheld annually from the

counties' November monthly distribution provided for in section 17,

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

snow removal purposes as provided in section 12a.

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

county road commissions from the Michigan transportation fund shall

be returned to each county road commission having county primary,

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

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

pursuant to section 12b. The return shall be in addition to the

amounts provided in subsections (6) and (7) and for the purposes

stated in those subsections.

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

county road commissions from the Michigan transportation fund shall

be returned to the county road commissions in the same percentages

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

road commissions as provided in this subsection shall be expended

by the county road commissions for the preservation, construction,

acquisition, and extension of county local road systems and shall

be in addition to the amounts provided in subsection (7).

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

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

road commission for the preservation, construction, acquisition,

and extension of the county primary road system, including the

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

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

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

follows:

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

received within the respective county during the 12 months next

preceding the date of each monthly distribution, as specific taxes

upon registered motor vehicles under the Michigan vehicle code,

1949 PA 300, MCL 257.1 to 257.923.

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

total mileage in the county primary road system of each county

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

systems of the state.

each county.

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

returned to counties shall be expended by each county road

commission for the preservation, construction, acquisition, and

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

including the acquisition of a necessary right of way for the

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

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

counties as follows:

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

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

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

systems of the state.

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

that the total population outside of incorporated municipalities in

each county bears to the total population outside of incorporated

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

the most recent statewide federal census as certified at the

beginning of the state fiscal year.

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

funds of a board of county road commissioners shall be expended

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

the payment of contractual contributions pledged for the payment of

bonds, for debt service requirements for the payment of contractual

contributions pledged for the payment of bonds, and for debt

service requirements for the payment of notes and loans in the

following order of priority:

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

board of county road commissioners under a contract entered into

under 1941 PA 205, MCL 252.51 to 252.64, ~~which contributions~~ 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 ~~to be~~ made pursuant to contracts

entered into under section 18d ~~, which contributions~~ 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.

received pursuant to section ~~11(7),~~ 11(5), to the extent other

funds have not been made available for that payment.

(9) Beginning November 1, 2008, ~~not to exceed~~ 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, ~~not to~~

~~exceed~~ 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. ~~Not to exceed~~ 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 section 14(6) may be transferred to and expended

on the county primary road system of that county.

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

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

the construction or reconstruction of a new highway or existing

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

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

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

funds may be expended for the development, construction, or repair

of an off-street parking facility.

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

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

system shall be expended for the maintenance, improvement, or

acquisition of appurtenant roadside parks and motor parkways.

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

county road commission for the purposes provided in this section

and shall be deposited by the county treasurer in a designated

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

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

county road commission, and interest accruing on the money shall

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

(13) In a county to which ~~the~~ funds are returned 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

~~state transportation~~ department with respect to a state trunk line

and connecting links of the state trunk line within the limits of

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

the performance by each contracting party of the work contemplated

by the contract including engineering services and the acquisition

of rights of way in connection with the work contemplated, by

purchase or condemnation, by any of the contracting parties in its

own name and the agreement may provide for joint participation in

the costs.

(15) Money distributed from the Michigan transportation fund

may be expended for construction purposes on county local roads

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

Michigan transportation funds may be expended for the construction

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

of the cost of the construction of local road bridges. ~~This~~

~~subsection does not apply to section 11b.~~

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

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

commission from the Michigan transportation fund less the amounts

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

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

streets, and bridges, and for the payment of contractual

contributions pledged for the payment of bonds or portions of

bonds, debt service requirements for the payment of bonds or

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

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

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

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

appropriate certificate is filed under subsection ~~(19)~~ (18) but

only to the extent necessary, this subsection ~~shall~~ 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 ~~which~~ 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.

and buildings, and for the payment of contractual contributions

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

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

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

for the purpose of providing funds for capital outlay projects for

equipment and buildings.

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

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

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

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

pass a resolution approving these projects. This resolution shall

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

copy of each approved resolution shall be forwarded immediately to

the department.

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

section 12b.

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

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

~~has~~ 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

~~annually~~ at least 90% of the federal revenue distributed to the ~~use~~

~~of the~~ county road commission for highways, roads, streets, and

bridges, less the amount expended on urban routes for purposes

other than preservation ~~purposes~~ and the amount expended for hard-

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

preservation of highways, roads, streets, and bridges. A county

road commission may expend in a 1 year less than 90% of the federal

revenue distributed to the ~~use of the~~ county road commission for

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

urban routes for purposes other than preservation ~~purposes~~ and the

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

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

bridges, if that year is part of a 3-year period in which at least

90% of the total federal revenue distributed in the 3-year period

to the ~~use of the~~ county road commission for highways, roads,

streets, and bridges, less the amount expended on urban routes for

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 a 1 year less than

90% of the federal revenue distributed to the ~~use of the~~ county

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

amount expended on urban routes for purposes other than

preservation ~~purposes~~ and the amount expended for hard-surfacing of

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

highways, roads, streets, and bridges and that year is not a part

of a 3-year period in which at least 90% of the total federal

revenue distributed in the 3-year period to the ~~use of the~~ county

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

amount expended on urban routes for 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, the county

road commission shall expend in each year subsequent to the 3-year

period 100%, or less in 1 year if sufficient for the purposes of

this subsection, of the federal revenue distributed to the ~~use of~~

~~the~~ county road commission for highways, roads, streets, and

bridges, less the amount expended on urban routes for purposes

other than preservation ~~purposes~~ and the amount expended for hard-

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

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

average percentage spent on the preservation of highways, roads,

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

less the amount expended on urban routes for purposes other than

preservation ~~purposes~~ and the amount expended for hard-surfacing of

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

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

subsection. The requirements of this subsection shall be waived if

compliance would cause the county road commission to be ineligible

~~according to federal law~~ for federal revenue under federal law, but

only to the extent necessary to make the county road commission

eligible ~~according to~~ for that revenue under federal law. ~~for that~~

~~revenue.~~ For the purpose of the calculations required by this

subsection, the amount expended on urban routes by a county road

commission for purposes other than preservation ~~purposes~~ and the

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

aid system shall be deducted from the total federal revenue

distributed to the use of the county road commission.

(18) A county road commission shall certify ~~, which~~

~~certification shall, for purposes of the validity of bonds and~~

~~notes, be conclusive as to the matters stated therein,~~ to the ~~state~~

~~transportation~~ department on or before the issuance of any bonds or

notes issued after July 1, 1983, pursuant to 1943 PA 143, MCL

141.251 to 141.254, 1941 PA 205, MCL 252.51 to 252.64, or section

18c or 18d, for purposes other than the preservation of highways,

roads, streets, and bridges and purposes other than the purposes

specified in subsection (16)(c) that its average annual debt

service requirements for all bonds and notes or portions of bonds

and notes issued after July 1, 1983, for purposes other than the

preservation of highways, roads, streets, and bridges and other

than for the purposes specified in subsection (16)(c), including

the bond or note to be issued does not exceed 10% of the funds

returned to the county road commission pursuant to this act, less

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

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

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

after the issuance of the notes or bonds, the change shall be made

in ~~such~~ a manner ~~to maintain~~ that maintains compliance with the

certification required by this subsection, as of the date the

certificate was originally issued, but no such change shall

invalidate or otherwise affect the bonds or notes with respect to

which the certificate was issued or the obligation to pay debt

service on the bonds or notes. 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 ~~state transportation~~ department pursuant to

this act.

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

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

this section may be expended for administrative expenses. A county

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

~~shall be~~ is subject to section 14(5) unless a waiver is granted by

the department of treasury. As used in this subsection,

"administrative expenses" means those expenses that are not

assigned including, but not limited to, specific road construction

or preservation projects and are often referred to as general or

supportive services. Administrative expenses ~~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.

(21) In addition to the financial compliance audits required

by law, the department ~~of treasury shall~~ 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

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 July 1, 2012 and shall report to the transportation

committees of the senate and house of representatives no later than

August 1, 2012 on the additional audit procedures and reporting

requirements. The department ~~of treasury~~ shall provide ~~6 months~~

notice to the county road commission, or county board of

commissioners, or any other county governmental agency acting as

the county road authority, as applicable, of the standards to be

used for audits performed under this subsection. The notice shall

be provided 6 months prior to the fiscal year in which the audit is

conducted. The department shall notify the county road commission,

or 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, or county boards

of commissioners, or any other county governmental agencies acting

as county road authorities, as applicable, shall make available to

the department ~~of treasury~~ 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 amount distributed to cities and villages

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

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

specified in this section. ~~As used in this section, "population"~~

~~means the population according to the most recent statewide federal~~

~~census as certified at the beginning of the state fiscal year,~~

~~except that, if a municipality has been newly incorporated since~~

~~completion of the census, the population of the municipality for~~

~~purposes of the distribution of funds before completion of the next~~

~~census shall be the population as determined by special federal~~

~~census, if there is a special federal census, and if not, by the~~

~~population as determined by the official census in connection with~~

~~the incorporation, if there is such a census and, if not, by a~~

~~special state census to be taken at the expense of the municipality~~

~~by the secretary of state pursuant to section 6 of the home rule~~

~~city act, 1909 PA 279, MCL 117.6.~~ The amount received by ~~the~~ a

newly incorporated municipality shall be in place of any other

direct distribution of funds from the Michigan transportation fund.

The population of ~~the~~ a newly incorporated municipality as

determined under this section shall be added to the total

population of all incorporated cities and villages in the state in

computing the amounts to be returned under this section to each

municipality in the state. Major street mileage, local street

mileage, and equivalent major mileage, if applicable, shall be

determined by the ~~state transportation~~ department before the next

month for which distribution is made following the effective date

of incorporation of a newly incorporated municipality.

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

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

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

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

amount withheld shall be used to partially reimburse ~~those~~ cities

and villages located in ~~those~~ counties that are eligible for snow

removal funds pursuant to section 12a and that have costs for

winter maintenance on major and local streets that are greater than

the statewide average. The distributions shall be made annually

during February and shall be calculated separately for the major

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

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

winter maintenance expenditures after deducting the product of its

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

the average municipal winter maintenance factor. Winter maintenance

expenditures shall be determined from the street financial reports

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

village that does not submit a street financial report for the

fiscal year ending before July 1 by the subsequent December 31

~~shall be~~ 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 ~~shall be~~

~~determined~~ annually ~~by the state transportation department~~ by

dividing the total expenditures of all cities and villages on

winter maintenance of streets and highways by the total amount

earned by all cities and villages under subsections (3) and (4)

during the 12 months. If the sum of the distributions to be made

under this subsection exceeds the amount withheld, the

distributions to each eligible city and village shall be reduced

proportionately. If the sum is less than the amount withheld, the

balance shall be added to the amount available for distribution

under subsections (3) and (4) during the next month. The

distributions shall be for use on the major and local street

systems respectively and shall be subject to the same provisions as

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

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

returned to the cities and villages, after deducting the amounts

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

same proportion that the population of each bears to the total

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

proportion that the equivalent major mileage in each bears to the

total equivalent major mileage in all cities and villages. ~~As used~~

~~in this section, "equivalent major mileage"~~

~~means the sum of 2 times the state trunk line mileage certified by~~

~~the state transportation department as of March 31 of each year, as~~

~~being within the boundaries of each city and village having a~~

~~population of 25,000 or more, plus the major street mileage in each~~

~~city and village, multiplied by the following factor:~~

~~1.0 for cities and villages of 2,000 or less population;~~

~~1.1 for cities and villages from 2,001 to 10,000 population;~~

~~1.2 for cities and villages from 10,001 to 20,000 population;~~

~~1.3 for cities and villages from 20,001 to 30,000 population;~~

~~1.4 for cities and villages from 30,001 to 40,000 population;~~

~~1.5 for cities and villages from 40,001 to 50,000 population;~~

~~1.6 for cities and villages from 50,001 to 65,000 population;~~

~~1.7 for cities and villages from 65,001 to 80,000 population;~~

~~1.8 for cities and villages from 80,001 to 95,000 population;~~

~~1.9 for cities and villages from 95,001 to 160,000 population;~~

~~2.0 for cities and villages from 160,001 to 320,000~~

~~population;~~

~~and for cities over 320,000 population, by a factor of 2.1~~

~~increased successively by 0.1 for each 160,000 population increment~~

~~over 320,000.~~ The amount returned under this subsection shall be

used by each city and village for the following purposes in the

following order of priority:

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

city or village under the provisions of contracts previously

entered into under 1941 PA 205, MCL 252.51 to 252.64, ~~which~~

~~contributions~~ that have been previously pledged for the payment of

the principal and interest on bonds issued under that act; or for

the payment of the principal and interest upon bonds issued by a

city or village pursuant to 1952 PA 175, MCL 247.701 to 247.707.

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

projects undertaken by the city or village jointly with the ~~state~~

~~transportation~~ department.

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

not been made available for that payment.

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

extension of the major street system as defined by this act

including the acquisition of a necessary right of way for the

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

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

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

village's general obligation bonds ~~which~~ that are attributable to

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

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

city or village by this subsection shall be expended for the

preservation or acquisition of appurtenant roadside parks and motor

parkways. Surplus funds may be expended for the development,

construction, or repair of off-street parking facilities, ~~and~~ 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 ~~subsection~~ subdivision are used for transportation purposes.

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

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

preservation, construction, acquisition, and extension of the local

street system of the city or village, ~~as defined by this act,~~

including the acquisition of a necessary right of way for the

system, work incidental to the system, and subject to subsection

(5), for the payment of the principal and interest on ~~that~~ the

portion of the city's or village's general obligation bonds ~~which~~

that are attributable to the construction or reconstruction of the

city's or village's local street system. The amount returned under

this subsection shall be returned to the cities and villages 60% in

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

population of all incorporated cities and villages in the state,

and 40% in the same proportion that the total mileage of the local

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

street systems of all cities and villages of the state. The payment

of the principal and interest upon bonds issued by a city or

village pursuant to 1952 PA 175, MCL 247.701 to 247.707, and after

that payment, the payment of debt service on loans received under

section 11(5), shall have priority in the expenditure of money

returned under this subsection.

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

maintenance and preservation of its local street system under this

act represents the total responsibility of the state for local

street system support. Funds distributed from the Michigan

transportation fund shall not be expended for construction purposes

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

local revenues including other money returned to a city or village

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

the state, from funds that can be raised by taxation in cities and

villages for street purposes within the limitations of the state

constitution of 1963 and statutes of ~~the~~ this state, from special

assessments, or from any other source.

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

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

city or village. However, the first priority shall be the major

street system. Money returned for expenditure on the major street

system shall be expended in the priority order provided in

subsection (3) except that surplus funds may be transferred for

preservation of the local street system. Major street funds

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

for construction but may be used for preservation. ~~as defined in~~

~~section 10c.~~ A city or village shall not transfer more than 50% of

its annual major street funding for the local street system unless

it has adopted and is following an asset management process for its

major and local street systems and adopts a resolution with a copy

to the department setting forth all of the following:

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

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

maintaining its major streets.

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

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

management process for its major and local street systems.

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

plan shall obtain the concurrence of the department to transfer

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

system. The department may provide for pilot projects that would

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

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

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

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

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

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

may be expended for administrative expenses. ~~As used in this~~

~~subsection, "administrative expenses" means those expenses that are~~

~~not assigned including, but not limited to, specific road~~

~~construction or maintenance projects and are often referred to as~~

~~general or supportive services. Administrative expenses shall not~~

~~include net equipment expense, net capital outlay, debt service~~

~~principal and interest, and payments to other state or local~~

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

~~construction projects or maintenance activities.~~ A city or village

~~which in a year~~ that expends more than 10% for administrative

expenses ~~shall be~~ in a year is subject to section 14(5).

(9) In each city and village to which funds are returned under

this section, the responsibility for street preservation and the

development, construction, or repair of off-street parking

facilities and construction or repair of street lighting shall be

coordinated by a single administrator to be designated by the

governing body who shall be responsible for and shall represent the

municipality in transactions with the ~~state transportation~~

department pursuant to this act.

(10) Cities and villages may provide for consolidated street

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

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

the state transportation commission for the performance of street

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

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

provide for ~~the performance by~~ any of the contracting parties of to

perform the work contemplated by the contracts including services

and acquisition of rights of way, by purchase or condemnation by

~~any of the contracting parties~~ in its own name. The agreement may

provide for joint participation in the costs if appropriate.

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

for purposes provided in this section shall be credited to the

appropriate street fund.

(12) In addition to the financial compliance audits required

by law, the department ~~of treasury shall~~ may conduct performance

audits and make investigations of the disposition of all state

funds received by cities and villages for transportation purposes

to determine compliance with the terms and conditions of this act.

Performance audits shall be conducted according to government

auditing standards issued by the United States general accounting

office. The department shall develop all performance audit

procedures and reporting requirements sufficient to determine

whether funds expended under this section were expended in

compliance with this act by July 1, 2012 and shall report to the

transportation committees of the senate and house of

representatives no later than August 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 ~~of treasury~~

shall provide notice to cities and villages of the standards to be

used for audits under this subsection prior to the fiscal year in

which the audit is conducted. The department shall notify cities

and villages of any subsequent changes to the standards. Cities and

villages shall make available to the department ~~of treasury~~ the

pertinent records for the audit. Performance audits may be

performed at the discretion of the department or upon receiving a

request from the speaker of the house of representatives or the

senate majority leader.

(13) 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.

recent statewide federal census as certified at the beginning of

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

newly incorporated since completion of the census, the population

of the municipality for purposes of the distribution of funds

before completion of the next census shall be the population as

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

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

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

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

expense of the municipality by the secretary of state pursuant to

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