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Highway Program Revenue Assumptions
MDOT's Fiscal Year (FY) 2023-2027 Highway Program is supported by a combination of state and federal funding sources. Roughly half of revenue comes from federal programs authorized under the new surface transportation authorization. The other half is comprised of state road-use fees and motor vehicles taxes, non-user fees such as the income tax redirect and excise tax on recreational marijuana distributed to the State Trunkline Fund (STF), and financing provided through bonding.
Federal Funding for the Highway Program
The total federal highway program revenue expected for FY 2023-2027 is $5.3 billion. FY 2022 is the first year of the new Infrastructure Investment and Jobs Act (IIJA) surface transportation authorization bill. Authorized in November 2021, the IIJA provides stable federal funding with a 2 percent annual growth rate through FY 2026 and formula-based trunkline revenue increases from FY 2022 to 2026 of $1.24 billion more than the previous authorization. However, a long-term sustainable solution to the Highway Trust Fund (HTF) solvency problem is still needed.
2023-2027 Highway Program Estimated Average Annual Revenue, Including Routine Maintenance (in millions)
State Funding for the Highway Program
Nearly $3.6 billion in total state revenue is available for MDOT’s FY 2023-2027 Highway Program, at an average of $724 million per year. During this period, Rebuilding Michigan bonds will add $1.1 billion in road financing to projects expected to be delivered between FY 2023 and 2025, out of the total $3.5 billion for FY 2020-2025. Revenue for the $222.2 million Blue Water Bridge (BWB) Plaza project will come from a federal grant, BWB toll revenues, and future BWB bonding. Other factors affecting state funding include fuel tax rates tied to inflation to help remedy the decline of its purchasing power and $234.6 million in income tax with an average of $25.9 million in excise tax on recreational marijuana appropriated annually to the STF.