HOUSE BILL No. 6523 November 13, 2002, Introduced by Rep. Shackleton and referred to the Committee on Transportation. 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 clas- sification; 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 trans- portation fund and the use and administration of the fund for transportation purposes; 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 pur- poses; to set up and establish the Michigan truck safety commis- sion; to establish certain standards for road contracts for cer- tain businesses; to provide for the continuing review of trans- portation needs within the state; to authorize the state trans- portation 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 appropria- tions and tax levies by counties and townships for county roads; to authorize contributions by townships for county roads; to pro- vide for the establishment and administration of the state trunk line fund, critical bridge fund, comprehensive transportation fund, and certain other funds; to provide for the deposits in the state trunk line fund, critical bridge fund, comprehensive 07548'02 MRM 2 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 submis- sion 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 offi- cials; to provide for the making of loans for transportation pur- poses 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 2002 PA 498. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 11. (1) A fund to be known as the state trunk line 2 fund is established and shall be set up and maintained in the 3 state treasury as a separate fund. The money deposited in the 4 state trunk line fund is appropriated to the state transportation 5 department for the following purposes in the following order of 6 priority: 7 (a) For the payment, but only from money restricted as to 8 use by section 9 of article IX of the state constitution of 1963, 9 of bonds, notes, or other obligations in the following order of 10 priority: 11 (i) For the payment of contributions required to be made by 12 the state highway commission or the state transportation commis- 13 sion under contracts entered into before July 18, 1979, under 14 1941 PA 205, MCL 252.51 to 252.64, which contributions have been 15 pledged before July 18, 1979, for the payment of the principal 16 and interest on bonds issued under 1941 PA 205, MCL 252.51 to 07548'02 3 1 252.64, for the payment of which a sufficient sum is irrevocably 2 appropriated. 3 (ii) For the payment of the principal and interest upon 4 bonds designated "State of Michigan, State Highway Commissioner, 5 Highway Construction Bonds, Series I", dated September 1, 1956, 6 in the aggregate principal amount of $25,000,000.00, issued pur- 7 suant to former 1955 PA 87 and the resolution of the state admin- 8 istrative board adopted August 6, 1956, for the payment of which 9 a sufficient sum is irrevocably appropriated. 10 (iii) For the payment of the principal and interest on bonds 11 issued under section 18b for transportation purposes other than 12 comprehensive transportation purposes as defined by law and the 13 payment of contributions of the state highway commission or state 14 transportation commission to be made pursuant to contracts 15 entered into under section 18d, which contributions are pledged 16 to the payment of principal and interest on bonds issued under 17 the authorization of section 18d and contracts executed pursuant 18 to that section. A sufficient portion of the fund is irrevocably 19 appropriated to pay, when due, the principal and interest on 20 bonds or notes issued under section 18b for purposes other than 21 comprehensive transportation purposes as defined by law, and to 22 pay the annual contributions of the state highway commission and 23 the state transportation commission as are pledged for the pay- 24 ment of bonds issued pursuant to contracts authorized by section 25 18d. 26 (b) For the transfer of funds appropriated pursuant to 27 section 10(1)(g) to the transportation economic development fund, 07548'02 4 1 but the transfer shall be reduced each fiscal year by the amount 2 of debt service to be paid in that year from the state trunk line 3 fund for bonds, notes, or other obligations issued to fund 4 projects of the transportation economic development fund, which 5 amount shall be certified by the department. 6 (c) For the transfer of funds appropriated pursuant to sec- 7 tion 10(1)(a) to the railroad grade crossing account in the state 8 trunk line fund for expenditureto meet the cost, in whole or in9part, of providing for the improvement, installation, and retire-10ment of new or existing safety devices or other rail grade cross-11ing improvements at rail grade crossings on public roads and12streets under the jurisdiction of this state, counties, or cities13and villagesFOR RAIL GRADE CROSSING IMPROVEMENT PURPOSES AT 14 RAIL GRADE CROSSINGS ON PUBLIC ROADS AND STREETS UNDER THE JURIS- 15 DICTION OF THE STATE, COUNTIES, CITIES, OR VILLAGES. Projects 16 shall be selected for funding in accordance with the following: 17 (i) Not more than 50% or less than 30% of these funds and 18 matched federal funds shall be expended for state trunk line 19 projects. 20 (ii) In prioritizing projects for these funds, in whole or 21 in part, the department shall consider train and vehicular traf- 22 fic volumes, accident history, traffic control device improvement 23 needs, and the availability of funding. 24 (iii) Consistent with the other requirements for these 25 funds, the first priority for funds deposited pursuant to this 26 subdivision for rail grade crossing improvements and retirement 27 shall be to match federal funds from the railroad-highway grade 07548'02 5 1 crossing improvement program or other comparable federal programs 2 IF A MATCH IS REQUIRED UNDER FEDERAL LAW. 3(iv) If federal funds from the railroad-highway grade4crossing improvement program or other comparable federal programs5have been exhausted, funds deposited pursuant to this subdivision6shall be used to fund 100% of grade crossing projects that7receive the highest priority of unfunded projects pursuant to8criteria established by the department.9(v) State railroad grade crossing funds shall not be used,10either as 100% of project cost or to match federal11railroad-highway grade crossing improvement funds, for a crossing12that is determined by the department pursuant to the criteria13established by the department to be a lower priority than other14projects that have not yet been funded. However, if sufficient15funds are available, these state railroad grade crossing account16funds may be used for not more than 50% of a project's cost for a17crossing that is determined by the department pursuant to the18criteria established by the department to be a lower priority if19the balance of not less than 50% of the project's cost is pro-20vided by the road authority, railroad, or other sources.21(vi) The type of railroad grade crossing improvement,22installation, relocation, or retirement of grade crossing sur-23faces, active and passive traffic control devices, pavement mark-24ing, or other related work shall be eligible for these railroad25grade crossing account funds in the same manner as the project26type eligibility provided by the federal funds from the07548'02 6 1railroad-highway grade crossing improvement program, except for2the following:3(A) For new railroad crossings, these funds may be used for4the crossing surface, active and passive traffic control devices,5pavement marking, and other improvements necessitated by the new6crossing.7(B) These funds may be used for the modification, reloca-8tion, or modernization of railroad grade crossing facilities9necessitated by roadway improvement projects.10 (iv)(C)If the department and the road authority with 11 jurisdiction overa public road or streetTHE crossing formally 12 agree that the grade crossing should be eliminated by permanent 13 closing of the public road or street, theroad authority making14the closing shall receive $5,000.00 from the railroad grade15crossing account. In addition, any connecting road improvements16necessitated by the grade crossing closure are reimbursable on an17actual cost basis not to exceed $10,000.00 per crossing closed.18Thephysical removal of the crossing, roadway within railroad 19 rights of way and street termination treatment will be negotiated 20 between the road authority and railroad company. The funds pro- 21 vided to the road authority as a result of the crossing closure 22 will be credited to its account representing the same road or 23 street system on which the crossing is located AND SHALL BE USED 24 FOR ANY TRANSPORTATION PURPOSE WITHIN THAT ROAD AUTHORITY'S 25 JURISDICTION. 26 (d) For the total operating expenses of the state trunk line 27 fund for each fiscal year as appropriated by the legislature. 07548'02 7 1 (e) For the preservation of state trunk line highways and 2 bridges. 3 (f) For the opening, widening, improving, construction, and 4 reconstruction of state trunk line highways and bridges, includ- 5 ing the acquisition of necessary rights of way and the work inci- 6 dental to that opening, widening, improving, construction, or 7 reconstruction. Those sums in the state trunk line fund not oth- 8 erwise appropriated, distributed, determined, or set aside by law 9 shall be used for the construction or reconstruction of the 10 national system of interstate and defense highways, referred to 11 in this act as "the interstate highway system" to the extent nec- 12 essary to match federal aid funds as the federal aid funds become 13 available for that purpose; and, for the construction and recon- 14 struction of the state trunk line system. 15 (g) The state transportation department may enter into 16 agreements with county road commissions and with cities and vil- 17 lages to perform work on a highway, road, or street. The agree- 18 ments may provide for the performance by any of the contracting 19 parties of any of the work contemplated by the contract including 20 engineering services and the acquisition of rights of way in con- 21 nection with the work, by purchase or condemnation by any of the 22 contracting parties in its own name, and for joint participation 23 in the costs, but only to the extent that the contracting parties 24 are otherwise authorized by law to expend money on the highways, 25 roads, or streets. The state transportation department also may 26 contract with a county road commission, city, and village to 27 advance money to a county road commission, city, and village to 07548'02 8 1 pay their costs of improving railroad grade crossings on the 2 terms and conditions agreed to in the contract. A contract may 3 be executed before or after the state transportation commission 4 borrows money for the purpose of advancing money to a county road 5 commission, city, or village, but the contract shall be executed 6 before the advancement of any money to a county road commission, 7 city, or village by the state transportation commission, and 8 shall provide for the full reimbursement of any advancement by a 9 county road commission, city, or village to the state transporta- 10 tion department, with interest, within 15 years after advance- 11 ment, from any available revenue sources of the county road com- 12 mission, city, or village or, if provided in the contract, by 13 deduction from the periodic disbursements of any money returned 14 by the state to the county road commission, city, or village. 15 (h) For providing inventories of supplies and materials 16 required for the activities of the state transportation 17 department. The state transportation department may purchase 18 supplies and materials for these purposes, with payment to be 19 made out of the state trunk line fund to be charged on the basis 20 of issues from inventory in accordance with the accounting and 21 purchasing laws of this state. 22 (2) Notwithstanding any other provision of this act, at 23 least 90% of state revenue appropriated annually to the state 24 trunk line fund less the amounts described in subdivisions (a) to 25 (i) shall be expended annually by the state transportation 26 department for the preservation of highways, roads, streets, and 27 bridges and for the payment of debt service on bonds, notes, or 07548'02 9 1 other obligations described in subsection (1)(a) issued after 2 July 1, 1983, for the purpose of providing funds for the preser- 3 vation of highways, roads, streets, and bridges. Of the amounts 4 appropriated for state trunk line projects, the department shall, 5 where possible, secure warranties of not less than 5-year full 6 replacement guarantee for contracted construction work. If an 7 appropriate certificate is filed under section 18e but only to 8 the extent necessary, this subsection shall not prohibit the use 9 of any amount of money restricted as to use by section 9 of arti- 10 cle IX of the state constitution of 1963 and deposited in the 11 state trunk line fund for the payment of debt service on bonds, 12 notes, or other obligations pledging for the payment thereof 13 money restricted as to use by section 9 of article IX of the 14 state constitution of 1963 and deposited in the state trunk line 15 fund, whenever issued, as specified under subsection (1)(a). The 16 amounts which are deducted from the state trunk line fund for the 17 purpose of the calculation required by this subsection are as 18 follows: 19 (a) Amounts expended for the purposes described in subsec- 20 tion (1)(a) for the payment of debt service on bonds, notes, or 21 other obligations issued before July 2, 1983. 22 (b) Amounts expended to provide the state matching require- 23 ment for projects on the national highway system and for the pay- 24 ment of debt service on bonds, notes, or other obligations issued 25 after July 1, 1983, for the purpose of providing funds for the 26 state matching requirements for projects on the national highway 27 system. 07548'02 10 1 (c) Amounts expended for the construction of a highway, 2 street, road, or bridge to 1 or more of the following or for the 3 payment of debt service on bonds, notes, or other obligations 4 issued after July 1, 1983, for the purpose of providing funds for 5 the construction of a highway, street, road, or bridge to 1 or 6 more of the following: 7 (i) A location for which a building permit has been obtained 8 for the construction of a manufacturing or industrial facility. 9 (ii) A location for which a building permit has been 10 obtained for the renovation of, or addition to, a manufacturing 11 or industrial facility. 12 (d) Amounts expended for capital outlay other than for high- 13 ways, roads, streets, and bridges or to pay debt service on 14 bonds, notes, or other obligations issued after July 1, 1983, for 15 the purpose of providing funds for capital outlay other than for 16 highways, roads, streets, and bridges. 17 (e) Amounts expended for the operating expenses of the state 18 transportation department other than the units of the department 19 performing the functions assigned on January 1, 1983 to the 20 bureau of highways. 21 (f) Amounts expended pursuant to contracts entered into 22 before January 1, 1983. 23 (g) Amounts expended for the purposes described in subsec- 24 tion (5). 25 (h) Amounts appropriated for deposit in the transportation 26 economic development fund and the rail grade crossing account 27 pursuant to section 10(1)(g) and 10(1)(a). 07548'02 11 1 (i) Upon the affirmative recommendation of the director of 2 the state transportation department and the approval by resolu- 3 tion of the state transportation commission, those amounts 4 expended for projects vital to the economy of this state, a 5 region, or local area or the safety of the public. The resolu- 6 tion shall state the cost of the project exempted from this 7 subsection. 8 (3) Notwithstanding any other provision of this act, the 9 state transportation department shall expend annually at least 10 90% of the federal revenue distributed to the credit of the state 11 trunk line fund in that year, except for federal revenue expended 12 for the purposes described in subsection (2)(b), (c), (f), and 13 (i) and for the payment of notes issued under section 18b(9) on 14 the preservation of highways, roads, streets, and bridges. The 15 requirement of this subsection shall be waived if compliance 16 would cause this state to be ineligible according to federal law 17 for federal revenue, but only to the extent necessary to make 18 this state eligible according to federal law for that revenue. 19 (4) Notwithstanding any other provision of this section, the 20 state transportation department may loan money to county road 21 commissions, cities, and villages for paying capital costs of 22 transportation purposes described in the second paragraph of sec- 23 tion 9 of article IX of the state constitution of 1963 from the 24 proceeds of bonds or notes issued pursuant to section 18b or from 25 the state trunk line fund. Loans made directly from the state 26 trunk line fund shall be made only after provision of funds for 27 the purposes specified in subsection (1)(a) to (f). Loans 07548'02 12 1 described in this subsection are not subject to the revised 2 municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821. 3 (5) County road commissions, cities, and villages may borrow 4 money from the proceeds of bonds or notes issued under section 5 18b or the state trunk line fund for the purposes set forth in 6 subsection (4) that shall be repayable, with interest, from 1 or 7 more of the following: 8 (a) The money to be received by the county road commission, 9 city, or village from the Michigan transportation fund, except to 10 the extent the money has been or may in the future be pledged by 11 contract in accordance with 1941 PA 205, MCL 252.51 to 252.64, or 12 has been or may in the future be pledged for the payment of the 13 principal and interest upon notes issued pursuant to 1943 PA 143, 14 MCL 141.251 to 141.254, or has been or may in the future be 15 pledged for the payment of principal and interest upon bonds 16 issued under section 18c or 18d, or has been or may in the future 17 be pledged for the payment of the principal and interest upon 18 bonds issued pursuant to 1952 PA 175, MCL 247.701 to 247.707. 19 (b) Any other legally available funds of the city, village, 20 or county road commission, other than the general funds of the 21 county. 22 (6) Loans made pursuant to subsection (4) if required by the 23 state transportation department may be payable by deduction by 24 the state treasurer, upon direction of the state transportation 25 department, from the periodic disbursements of any money returned 26 by the state under this act to the county road commission, city, 27 or village, but only after sufficient money has been returned to 07548'02 13 1 the county road commission, city, or village to provide for the 2 payment of contractual obligations incurred or to be incurred and 3 principal and interest on notes and bonds issued or to be issued 4 under 1941 PA 205, MCL 252.51 to 252.64, 1943 PA 143, MCL 141.251 5 to 141.254, 1952 PA 175, MCL 247.701 to 247.707, or section 18c 6 or 18d. The interest rates and payment schedules of any loans 7 made from the proceeds of bonds or notes issued pursuant to sec- 8 tion 18b shall be established by the state transportation depart- 9 ment to conform as closely as practicable to the interest rate 10 and repayment schedules on the bonds or notes issued to make the 11 loans. However, the state transportation department may allow 12 for the deferral of the first payment of interest or principal on 13 the loans for a period of not to exceed 1 year after the respec- 14 tive first payment of interest or principal on the bonds or notes 15 issued to make the loans. 16 (7) The amount borrowed by a county road commission, city, 17 or village pursuant to subsection (5) shall not be included in, 18 or charged against, any constitutional, statutory, or charter 19 debt limitation of the county, city, or village and shall not be 20 included in the determination of the maximum annual principal and 21 interest requirements of, or the limitations upon, the maximum 22 annual principal and interest incurred under 1941 PA 205, 23 MCL 252.51 to 252.64, 1943 PA 143, MCL 141.251 to 141.254, 1952 24 PA 175, MCL 247.701 to 247.707, or section 18c or 18d. 25 (8) The county road commission, city, or village is not 26 required to seek or obtain the approval of the electors, the 27 municipal finance commission or its successor agency, or, except 07548'02 14 1 as provided in this subsection, the department of treasury to 2 borrow money pursuant to subsection (5). The borrowing is not 3 subject to the revised municipal finance act, 2001 PA 34, 4 MCL 141.2101 to 141.2821, or to section 5(g) of the home rule 5 city act, 1909 PA 279, MCL 117.5. The state transportation 6 department shall give at least 10 days' notice to the state trea- 7 surer of its intention to make a loan under subsection (4). If 8 the state treasurer gives notice to the director of the state 9 transportation department within 10 days of receiving the notice 10 from the state transportation department, that, based upon the 11 then existing financial or credit situation of the county road 12 commission, city, or village, it would not be in the best inter- 13 ests of the state to make a loan under subsection (4) to the 14 county road commission, city, or village, the loan shall not be 15 made unless the state treasurer, after a hearing, if requested by 16 the affected county road commission, city, or village, subse- 17 quently gives notice to the director of the state transportation 18 department that the loan may be made on the conditions that the 19 state treasurer specifies. 20 (9) The state transportation commission may borrow money and 21 issue bonds and notes under, and pursuant to the requirements of, 22 section 18b to make loans to county road commissions, cities, and 23 villages for the purposes described in the second paragraph of 24 section 9 of article IX of the state constitution of 1963, as 25 provided in subsection (4). A single issue of bonds or notes may 26 be issued for the purposes specified in subsection (4) and for 27 the other purposes specified in section 18b. The house and 07548'02 15 1 senate transportation appropriations subcommittees shall be 2 notified by the department if there are extras and overruns suf- 3 ficient to require approval of either the state administrative 4 board or the commission, or both, on any contract between the 5 department and a local road agency or a private business. 6 (10) The director of the state transportation department, 7 after consultation with representatives of the interests of 8 county road commissions, cities, and villages, shall establish, 9 by intergovernmental communication, procedures for the implemen- 10 tation and administration of the loan program established under 11 subsections (4) to (9). 12 (11) Not more than 10% per year of all of the funds received 13 by and returned to the state transportation department from any 14 source for the purposes of this section may be expended for 15 administrative expenses. The department shall be subject to 16 section 14(5) if more than 10% per year is expended for adminis- 17 trative expenses. As used in this subsection, "administrative 18 expenses" means those expenses that are not assigned including, 19 but not limited to, specific road construction or preservation 20 projects and are often referred to as general or supportive 21 services. Administrative expenses shall not include net equip- 22 ment expense, net capital outlay, debt service principal and 23 interest, and payments to other state or local offices which are 24 assigned, but not limited to, specific road construction projects 25 or preservation activities. 07548'02 16 1 (12) Any performance audits of the department shall be 2 conducted according to government auditing standards issued by 3 the United States general accounting office. 4 (13) Contracts entered into to advance money to a county 5 road commission, city, or village under subsection (1)(g) are not 6 subject to the revised municipal finance act, 2001 PA 34, 7 MCL 141.2101 to 141.2821. 8 (14) AS USED IN THIS SECTION, "RAIL GRADE CROSSING IMPROVE- 9 MENT PURPOSES" MEANS 1 OR MORE OF THE FOLLOWING: 10 (A) THE INSTALLATION AND MODERNIZATION OF ACTIVE AND PASSIVE 11 WARNING DEVICES AT RAILROAD GRADE CROSSINGS. 12 (B) THE INSTALLATION OR IMPROVEMENT OF GRADE CROSSING 13 SURFACES. 14 (C) MODIFICATION, RELOCATION, OR MODERNIZATION OF RAILROAD 15 GRADE CROSSING ACTIVE AND PASSIVE WARNING DEVICES NECESSITATED BY 16 ROADWAY IMPROVEMENT PROJECTS. 17 (D) TEST INSTALLATIONS OF INNOVATIVE WARNING DEVICES OR 18 OTHER INNOVATIVE APPLICATIONS. 19 (E) CONSTRUCTION OF NEW GRADE SEPARATIONS. 20 (F) A CASH INCENTIVE PAYMENT MADE PURSUANT TO SUBSECTION 21 (1)(C)(iv) FOR ANY PUBLIC ROAD OR STREET CROSSING, IN AN AMOUNT 22 NO GREATER THAN THE COST OF INSTALLING FLASHING LIGHT SIGNALS AND 23 HALF ROADWAY GATES AT THE CROSSING. 24 (G) ANY OTHER WORK THAT WOULD BE ELIGIBLE FOR FUNDING UNDER 25 THE FEDERAL RAILROAD-HIGHWAY GRADE CROSSING IMPROVEMENT PROGRAM 26 OR OTHER COMPARABLE PROGRAMS. 07548'02 Final page. 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