The House Appropriations Subcommittee on State and Local Transportation reviewed the Michigan Department of Transportation(MDOT) fiscal 2026 budget and the road funding package behind it, hearing an overview from the House Fiscal Agency and questions from committee members and public transit representatives.

The enacted MDOT budget for the year beginning Oct. 1 totals roughly $7.9 billion, driven largely by federal aid and state-restricted transportation revenues tied to a recently passed road funding package. House Fiscal Agency analyst Bill Hamilton told the committee the enacted budget reflects an estimated $1.1 billion in additional revenue tied to the package, and that the document the agency provided is a high-level summary that uses many estimates: "I'm gonna use the word estimate a lot in the presentation as we go through it."

Why it matters: the package changes how revenue is raised and routed to state and local road programs, transit, and targeted projects. Committee members sought clarity about what the new funds can be spent on, how the increases will be distributed among county road commissions, cities and villages, and how one-time and ongoing allocations interact with existing programs.

Key budget figures and program changes
- Gross appropriations: Hamilton presented the 2025 baseline (the budget year ending Sept. 30, 2025) and the enacted 2026 numbers: roughly $6.8 billion in the prior year versus about $7.9 billion enacted for 2026. Major fund sources include about $2.3 billion in federal aid and an increase in state restricted funds to approximately $5.4 billion in 2026. The enacted 2026 budget does not include general fund/general purpose appropriations carried forward from 2025.
- Capital and maintenance: State trunk line road and bridge construction (the capital program) increases in the budget by about $233.3 million (gross). State trunk line maintenance shows smaller increases to reflect service contract and material cost changes.
- Transit and passenger services: Local bus operating assistance (the formula-distributed Comprehensive Transportation Fund appropriation) was shown as a new baseline of $271.6 million under the enacted budget; Hamilton noted that this reflects formula distributions and that the 2025 baseline included one-time federal COVID relief that will not recur.
- One-time items: The enacted budget includes several one-time deposits or earmarks from the Comprehensive Transportation Fund, each listed in the House Fiscal Agency summary as roughly $5.3 million for items such as maritime port deposits, nonmotorized trails, heritage preservation, and general aviation airport support; MDOTand the fiscal agency will update estimates monthly.

Road funding package: revenue sources and distribution
Hamilton summarized the core elements of the legislative package affecting transportation funding. The package includes a 20-cent-per-gallon increase in the motor fuel tax (House Bill 4,183 in the presentation), an inflation adjustment tied to that tax, a higher surcharge on plug-in hybrid and electric vehicles linked to the motor fuel tax, and new dedicated funds created in Senate Bill 578 including a Neighborhood Road Fund and dedicated allocations for bridges, rail grade separations and transit.

Hamilton presented a simplified revenue flow: the 20-cent motor fuel tax increase generates roughly $1.07 billion in its first 12 months (gasoline, diesel and alternative fuels combined), with about $1.056 billion available for transportation after statutory deductions. From that pool, a portion (about $350.5 million in the fiscal-year view Hamilton used) was shown available for the three main road buckets (state trunk line, county road commissions and cities/villages) after other revenue shifts are taken into account.

Other revenue changes in the package include conversion or reallocation of previously earmarked income tax revenue and new revenue sources such as a projected wholesale marijuana tax. Hamilton enumerated dedicated allocations established in the package as shown in the enacted budget and companion statutes: $100 million for local bridge programs, $40 million for a rail grade separation fund, $100 million to public transportation programs, $35 million to the Comprehensive Transportation Fund, $65 million to an infrastructure projects authority fund drawn from the Neighborhood Road Fund, and the balance distributed among county road commissions, cities and villages and the state trunk line fund under new distribution percentages (a 52%/28%/20% split for county/city/state on one of the new buckets during the initial years the fiscal agency modeled).

Distribution mechanics and local impact
Hamilton emphasized that once money reaches the county or city/village buckets it is distributed among jurisdictions using the existing Act 51 (Public Act 51 of 1951) formulas. He estimated that, compared with a 2024 baseline, counties, cities and villages could expect a roughly 303% increase in revenue from the combination of changes the fiscal agency used in its early-year modeling, but he cautioned that the agencyand MDOTwill publish updated monthly revenue estimates and that the numbers are model-based estimates.

Committee questions and outstanding clarifications
Members asked for more detail about new or unclear programs. Representative Slaw asked who would administer the $65 million infrastructure projects authority fund; Hamilton said the program is new, the bill includes criteria and guidance, and that the fiscal agency would provide further detail after reviewing bill text. Representative Morgan and others asked whether township match requirements change; Hamilton said the Neighborhood Road Fund language appears to limit or remove match requirements in some instances and that counties and local units may have greater latitude with neighborhood road dollars than with existing Michigan Transportation Fund dollars under section 12 of Act 51.

Public comment on transit funding
The committee took brief public comment. Ken Jankowski, identified himself as affiliated with Huron Transit and MassTrans, thanked legislators for additional transit funding and urged clarity about the $35 million shown in the enacted package for the Comprehensive Transportation Fund and any remaining unallocated transit dollars. A representative of Michigan Public Transit (MassTrans/MPT) said the $45 million increase in the budget was significant for local providers but that the $35 million referenced in the package remained unallocated in the enacted documents and would require further action or administrative allocation.

Formal action recorded
Representative Morgan moved to adopt the minutes of the committee's Sept. 17 meeting; the clerk noted the committee had a quorum at the time and the motion prevailed by unanimous consent, the chair said. No other formal votes were taken during the session.

What comes next
Hamilton and witnesses told the committee the fiscal agency and MDOT will continue posting detailed line-item documents and updated revenue estimates; committee members said they expect follow-up briefings about program administration, guidance for the new funds and details for transit allocations as the subcommittee and full appropriations process continues.

Ending
With no further business, the committee adjourned after the presentations and brief public comment session.