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Transportation revenue package
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Why is the estimated fuel tax revenue increase for Fiscal Year (FY) 2026 only two-thirds of the fiscal year?
The $0.20 increase in fuel tax rate per gallon was effective on Jan. 1, 2026, therefore the revenues collected by the Department of Treasury during February were reported to MDOT in March processing month to be paid in April, resulting in the partial-year revenue estimate.
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How will MDOT report the Neighborhood Roads Fund (NRF) piece of funding to local agencies?
Since the NRF is a separate fund from the Michigan Transportation Fund (MTF), it will be reported and distributed separately from the monthly MTF payments.
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Will the new funding be paid monthly or a lump sum for the year?
It will be paid as soon as the statutory “carveouts off the top” are met and funds become available for distribution.
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Will these NRF funds impact our MTF monthly distributions?
The NRF is a separate funding source and will be distributed as another state restricted fund. Please note, however, that local agencies saw a temporary decrease in monthly MTF distributions as a result of PA 24 of 2025, which was effective Sept. 30, 2025. PA 24 of 2025 repealed the $600 million income tax redirection to the MTF (MCL 206.51d) that had been included on a monthly basis as a portion of local agency MTF distributions. This decrease will be resolved as the NRF funding is distributed from the Department of Treasury.
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When can we expect the first distribution from the NRF?
Treasury anticipates collecting the first Wholesale Marihuana Tax Revenues in April for the first quarter of calendar year 2026 sales. MDOT may see some deposits into NRF as early as May, and payments will be made to local agencies once statutory carveouts are met and funds become available for distribution.
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Will the new wholesale marihuana tax be distributed monthly as opposed to the current tax that is distributed in January following the fiscal year end?
Treasury anticipates collecting the new wholesale marihuana tax quarterly. Once we have the funds available for the NRF and have met all statutory carveouts, MDOT will distribute to locals. However, please be aware that this new marihuana tax revenue is still in court and MDOT can’t anticipate the litigation decision and how this would impact the funds that had been distributed.
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What changes will be made to the Act 51 Report?
Since NRF is a separate fund source and distributed as another state fund, it would be reported as “Other” state sources in the current ADARS system. It will have its separate lines in the new system (MiADART) when it’s ready to go live.
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Are these funds restricted like MTF?
Yes. Revenues deposited into the street/road funds take on the restricted nature and should only be spent on street/road projects.
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What can we use the money for?
The money must be used for Act 51-eligible activities on either a major/primary or local road on your certified map.
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Has MDOT considered what it will do to make sure that we are following the new requirements that no local match is required for NRF funding?
Per subsection (7), the receiving local road agencies (county road agencies, city and village road agencies) are not required to make a local match to receive NRF funds. However, they may request matching funds from other sources, but other agencies are not required to contribute.
(7) Matching funds are not required from a local unit of government or county road commission as a condition for expending money distributed under subsection (5) or (6). However, any governmental entity expending money distributed under subsection (5) or (6) may request matching funds from other sources.
Source: MCL - Section 247.663c -
How will these funds affect the Section 10k requirement?
Since this fund is separate from MTF, it will not be subject to the section 10k requirement.