Transportation Funding Bills
President Signs Transportation Reauthorization Bill
On December 4, 2015, President Obama signed a bill authorizing federal transportation programs and funding for the next five fiscal years through fiscal year 2020. The Fixing America’s Surface Transportation (FAST) Act authorizes $305 billion in investments for the nation’s roads, bridges, transit, and rail systems. It also provides a slight increase in funding for all transportation modes.
The focus of the highway funding continues to be on the core formula-based programs and the new bill also continues the ban on project earmarks. Considerable focus was placed on freight planning in the Moving Ahead for Progress in the 21st Century (MAP-21) Act, and the FAST Act builds on this by authorizing two new programs to target investments to projects that contribute to the efficient movement of freight. One program is formula-based and will provide an annual average of $30 million to Michigan. Funding from the second program will be awarded on a competitive basis by the U.S. Department of Transportation (USDOT) to large nationally significant highway, intermodal, and rail freight projects. These projects have total costs of $100 million or more.
The FAST Act also builds on the performance-based approach to investment decision-making that was included in the previous authorization bill. The FAST Act dedicates funds to support collection and management of data used in measuring performance and the development or improvement of tools that will help agencies better link investments with outcomes. The framework for performance-oriented highway and transit programs have not yet been implemented. This new funding should help ease the transition to this new federal performance-based approach.
Eliminated in MAP-21, the FAST Act resurrects the competitive program that make grants to transit agencies and states for bus and bus facility projects. It also authorizes approximately $440 million per year for programs that make grants for intercity passenger rail projects.
In order to fund the highway and transit investment authorized in the FAST Act, an additional $70 billion will be transferred from the federal general fund into the Highway Trust Fund (HTF). This will bring the total amount of non-transportation revenue that has been deposited into the HTF since 2008 to nearly $145 billion.
By authorizing funding for five years, the FAST Act breaks the cycle of short-term extensions and funding uncertainty that has characterized federal programs since 2008. This funding and programmatic certainty is one of the new law's most important aspects.
Summary of Michigan’s Road Funding Package
On November 10, 2015, Governor Snyder signed the $1.2 billion legislative transportation revenue package. This is the largest state investment in transportation in Michigan history. Below is a high-level summary of the main points:
- Starting in January 2017, an additional $600 million annually will be raised and dedicated for transportation purposes.
- Roughly one-third will flow to MDOT; two-thirds to counties, cities and villages. After full phase in, local agencies will see an estimated 60 percent increase in Act 51 revenue over their 2015 allocation.
- $400 million in additional fuel tax revenues (fuel taxes will rise to 26.3 cents per gallon for both gas and diesel).
- $200 million from a 20 percent increase in vehicle registration fees.
Starting in 2019, income tax revenues make up the remaining $600 million in additional money. The transfers will be phased in over a period of three years: $150 million in 2019; $325 million in 2020; and the full $600 million in 2021. This money will be divided between the State Transportation Fund, county road commissions, and cities and villages.