The following information provides an overview on Federal, State, and Local transportation funding in Michigan as well as helpful resources to learn more about the transportation programming and funding process.

Transportation Funding Overview

As mandated by federal law, Metropolitan Planning Organizations (MPOs) are regional policymaking bodies responsible for developing and coordinating multimodal transportation plans in urban areas with populations exceeding 50,000. The Southeast Michigan Council of Governments (SEMCOG) is the MPO for the seven counties in Southeast Michigan. Federal funds are available to MPOs for the purpose of transportation planning.  

Federal Transportation Funding

Federal Funding Roads

Federal transportation funding starts at the federal level and moves through several steps before reaching local projects.

The process includes:

  • Congress Authorizes and Appropriates Funds: Congress passes transportation bills that set funding levels and policies.  
  • Highway Trust Fund (HTF): The HTF, funded primarily by federal gas taxes and transportation fees, is divided into two accounts:  
    • Highway Account: Supports roads, highways, and MPO planning through FHWA-administered programs.  
    • Mass Transit Account: Funds public transportation investments, including MPO transit planning, through FTA-administered programs. 
  • Funds Flow to Michigan Department of Transporation (MDOT): MDOT receive funds based on federal apportionment tables and are then suballocated to MPOs.  
  • MPOs Receive Suballocated Funds: In Transportation Management Areas (TMA), urbanized areas over 200,000 which includes SEMCOG, funds are directly suballocated. 
  • MPOs Program Funds into Regional Plans: SEMCOG prioritize projects, with community input and board approval, and integrate funds into the Transportation Improvement Program (TIP) and Metropolitan Transportation Plan (MTP). Most federal programs require a local match typically 20% local funds and 80% federal funds. 
  • Project Implementation: Once programmed, the money is used to implement transportation projects that meet local and regional needs including safety, bridge and pavement improvements, mobility, and economic development, and more.

Federal Funding for Transit

Federally generated revenue for transit comes from federal motor fuel taxes, just as itdoes for highway projects. Some of the federal motor fuel tax collected nationwide isdeposited in the Mass Transit Account of the Highway Trust Fund (HTF). Federal-aidtransit funding is like federal-aid highway funding in that there are several core programs where money is distributed on a formula basis and other programs that arecompetitive in nature.

Brief descriptions of some of the most common federal-aid transit programs can be found here.

State Transportation Funding

State Funding for Roads

A majority of the revenue for Michigan’s publicly owned infrastructure is provided through the Michigan Transportation Fund (MTF), which is governed by Act 51. Act 51 provides internal formulas that direct how local road agencies can spend their distribution of MTF dollars.

After deductions, 10% of the MTF is deposited in the Comprehensive Transportation Fund (CTF) for public transit. The remaining funds are then distributed to the state trunkline system (39.1%), county road commissions (39.1%), and cities and villages (21.8%) for road and infrastructure projects.

Learn more about the MTF’s Distribution Formula to Local Road Agencies in Michigan here.

MDOT provides information including the MTF payment breakdown related to individual monthly payments to incorporated cities, villages and county road commissions pursuant to Act 51, new revenue package, estimated revenues, and monthly and annual reports found here.

State Funding for Transit

Most state-transit funding is derived from the same source as state highway funding, thestate motor fuel tax, and vehicle registration fees. Act 51 stipulates that 10% ofrevenues into the MTF, after deductions, flow into the Comprehensive TransportationFund (CTF). Additionally, a portion of the state level auto-related sales tax is depositedin the CTF. Distributions from the CTF are used by public transit agencies for matchingfederal grants and for operating expenses, which are not eligible for federal-aid funding,except for certain, limited items. MDOT OPT provides each transit agency withestimates of how much CTF funding it will receive and specifies the purpose(s) forwhich it can be used. For example, some distributed funds are used for local busoperations, while others are used to match federal funding, and yet other CTF funds canbe used for a variety of other purposes. In keeping with the general procedures for federal transit funds, the state-generated transit funding amounts programmed into theRTP by each agency are constrained to reasonably expected available revenues.

MDOT’s Passenger Transportation Programs can be found here.

Resources