SENATE BILL No. 10

 

 

January 15, 2019, Introduced by Senators WOJNO and LUCIDO and referred to the Committee on Transportation and Infrastructure.

 

 

 

     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 section 11 (MCL 247.661), as amended by 2015 PA 175.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 11. (1) A fund to be known as the state trunk line fund

 

is established in the state treasury as a separate fund. The money

 

deposited in the state trunk line fund is appropriated to the

 

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 pledged before July 18,

 

1979 and 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, 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

 

under 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 pledged to the payment of principal and

 

interest on bonds issued under section 18d and contracts entered

 

into under section 18d by the state highway commission or state

 

transportation commission to be made pursuant to under contracts

 

entered into under section 18d. 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 under contracts authorized by section 18d.

 

     (b) For the transfer of money appropriated under section

 

10(1)(i) 10(1)(j) 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.

 

     (c) For the transfer of money appropriated under section

 

10(1)(a) to the rail 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 this state, counties, cities, or villages. The

 

department shall select projects for funding in accordance with the

 

following:

 

     (i) Not more than 50% or less than 30% of this money and

 

matched federal money shall be expended for state trunk line

 

projects.

 

     (ii) In prioritizing projects for this money, 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 this money,

 

the first priority for money deposited under this subdivision for

 

rail grade crossing improvements and retirement shall be to match

 

federal money 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 a 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 shall be negotiated between

 

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

 

road authority as a result of the crossing closure shall 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 transfer of money appropriated under section

 

10(1)(b) to the grade crossing surface account in the state trunk

 

line fund for expenditure for rail grade crossing surface

 

improvement purposes at rail grade crossings on public roads and

 

streets under the jurisdiction of counties, cities, or villages.

 

Projects shall be selected for funding in accordance with the

 

following:

 

     (i) In prioritizing projects, the department shall consider

 

vehicular traffic volumes, relative crossing surface condition, the

 

ability of the railroad and local road authority to make

 

coordinated improvements, and the availability of funding.

 

     (ii) The grade crossing surface account shall fund 60% of the

 

project cost, with the remaining 40% funded by the railroad

 

company.

 

     (iii) Funding under the grade crossing surface account shall

 

be limited to items of work that are normally the responsibility of

 

the railroad under section 309 of the railroad code of 1993, 1993

 

PA 354, MCL 462.309. Maintenance of the roadway approaches to the

 

crossing will continue to be the responsibility of the party with

 

jurisdiction over that roadway.

 

     (e) For the total operating expenses of the state trunk line


fund for each fiscal year as appropriated by the legislature.

 

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

 

bridges.

 

     (g) 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 money as the federal aid money becomes

 

available for that purpose; and, for the construction and

 

reconstruction of the state trunk line system.

 

     (h) The department may enter into agreements with a local road

 

agency or a private sector company 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 maintenance, 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 department

 

also may contract with a local road agency to advance money to a

 

local road agency to pay the 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

 

local road agency, but the contract shall be executed before the

 

advancement of any money to a local road agency by the state

 

transportation commission, and shall provide for the full

 

reimbursement of any advancement by a local road agency to the

 

department, with interest, within 15 years after advancement, from

 

any available revenue sources of the local road agency or, if

 

provided in the contract, by deduction from the periodic

 

disbursements of any money returned by the state to the local road

 

agency.

 

     (i) For providing inventories of supplies and materials

 

required for the activities of the department. The 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, the

 

department shall annually expend at least 90% of state revenue

 

appropriated annually to the state trunk line fund less the amounts

 

described in subdivisions (a) to (i) 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 money for the preservation of highways, roads, streets,

 

and bridges. Of the amounts appropriated for state trunk line


projects, the department shall, where possible, secure pavement

 

warranties for full replacement or appropriate repair for

 

contracted construction work on pavement projects whose cost

 

exceeds $2,000,000.00, and shall secure pavement warranties for

 

full replacement or appropriate repair for projects for new

 

construction or reconstruction undertaken after the effective date

 

of the 2015 amendatory act that amended this subsection. April 1,

 

2016. The department shall compile and make available to the public

 

an annual report of all warranties that were secured under this

 

subsection and all pavement projects whose costs exceed

 

$2,000,000.00 where a warranty was not secured as provided in

 

subsection (14). If an appropriate certificate is filed under

 

section 18e but only to the extent necessary, this subsection does

 

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 in subsection

 

(1)(a). The amounts 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 money for the state

 

matching requirements for projects on the national highway system.

 

     (c) Amounts expended for the construction of a highway,

 

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 money 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 money for capital outlay other than for

 

highways, roads, streets, and bridges.

 

     (e) Amounts expended for the operating expenses of the

 

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 under 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 under section 10(1)(a) and (h).(j).

 

     (i) Upon the affirmative recommendation of the director of the

 

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

 

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 is 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

 

department may loan money to a local road agency 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 under 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 money


for the purposes specified in subsection (1)(a) to (f). Loans

 

described in this subsection are not subject to the revised

 

municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

 

     (5) A local road agency 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 local road agency 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 under 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 under 1952 PA 175, MCL 247.701 to

 

247.707.

 

     (b) Any other legally available money of the local road

 

agency, other than the general funds of the county.

 

     (6) If required by the department, loans made under subsection

 

(4) are payable by deduction by the state treasurer, upon direction

 

of the department, from the periodic disbursements of any money

 

returned by this state under this act to the local road agency, but

 

only after sufficient money has been returned to the local road

 

agency 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 under section 18b shall be established by

 

the 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 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 local road agency under

 

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 local road agency 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 under 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 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 department within 10

 

days of receiving the notice from the department, that, based upon

 

the then existing financial or credit situation of the local road

 

agency, it would not be in the best interests of this state to make

 

a loan under subsection (4) to the local road agency, the loan

 

shall not be made unless the state treasurer, after a hearing, if

 

requested by the affected local road agency, subsequently gives

 

notice to the director of the 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 section 18b to make loans to a local

 

road agency 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 department, after consultation with

 

representatives of the interests of local road agencies, 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 8% per year of all of the money received by

 

and returned to the department from any source for the purposes of

 

this section may be expended for administrative expenses. The

 

department shall be is subject to section 14(5) if more than 8% per

 

year is expended for administrative expenses. As used in this

 

subsection, "administrative expenses" means 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 do 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 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 local road

 

agency under subsection (1)(g) are not subject to the revised

 

municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

 

     (14) The department shall prepare on an annual basis a report

 

listing all warranties that were secured under subsection (2) and

 

indicate whether any of those warranties were redeemed and all

 

pavement projects whose costs exceed $2,000,000.00 for which a

 

warranty was not secured as described in subsection (2). The

 

department shall make the report required by this subsection


available to the public upon request and shall also post the report

 

on its website, which shall include, but is not limited to, all of

 

the following information:

 

     (a) The type of project.

 

     (b) The cost or estimated cost of the project.

 

     (c) The expected lifespan of the project.

 

     (d) Whether or not the project met or is currently meeting its

 

expected lifespan.

 

     (e) If the project failed to meet or is not meeting its

 

expected lifespan, the cause of the failure and the cost to replace

 

or repair the project.

 

     (f) The entity responsible for paying the cost of replacing or

 

repairing the project.

 

     (15) As used in this section:

 

     (a) "Local road agency" means that term as defined in section

 

9a.

 

     (b) "Rail grade crossing improvement purposes" means 1 or more

 

of the following:

 

     (i) The installation and modernization of active and passive

 

warning devices at railroad grade crossings.

 

     (ii) The installation or improvement of grade crossing

 

surfaces.

 

     (iii) Modification, relocation, or modernization of railroad

 

grade crossing active and passive warning devices necessitated by

 

roadway improvement projects.

 

     (iv) Test installations of innovative warning devices or other

 

innovative applications.


     (v) Construction of new grade separations.

 

     (vi) A cash incentive payment made pursuant to under

 

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.

 

     (vii) Any other work that would be eligible for funding under

 

the federal railroad-highway grade crossing improvement program or

 

other comparable programs.