LANSING, Mich. (WZMQ) – The Citizens Research Council (CRC) of Michigan says a major road-funding package enacted this year could deliver billions of new dollars, but only if several unstable revenue sources materialize as lawmakers intend.
Michigan’s new transportation funding overhaul is projected to deliver more than $1 billion in new or newly earmarked road revenue in fiscal 2026, and more than $2 billion by 2030, but Eric Paul Dennis, Infrastructure Research Associate with the CRC, warns those numbers may not hold.
“The intent is to get just over a billion dollars of new or newly earmarked revenue in fiscal 2026, increasing to over $2 billion by fiscal 2030,” Dennis said.
The report breaks down how the Legislature’s seven-bill package redistributes road funding, including the creation of a second major funding stream called the Neighborhood Roads Fund. After following the full flow of revenue, Dennis said that in fiscal 2027, 40% of the revenue is going to county road commissions. “City and village road agencies will be getting just a bit more than half that at 21.7% and MDOT about the same,” he said. “$205 million… will go to grant funding, mostly for local road agencies, or to the benefit of local road agencies or transit agencies.”
But the report warns that the system is far more volatile than the Legislature anticipated, emphasizing that the entire plan relies on revenue sources that may not materialize on schedule. One of the biggest questions surrounds the marijuana wholesale tax, which is currently tied up in litigation.
The same uncertainty applies to the corporate income tax earmark. Although the law directs more than $1 billion to roads by 2033, Dennis noted that “other uses have priority for that revenue… It’s not entirely clear how much of the anticipated revenue through the corporate income tax will ultimately become available.” Even if the revenue does come through, the state may not be able to distribute it on time: “They probably can’t distribute these funds until they know they’re available… which may not be clear until the following fiscal year.”
That timing gap creates major challenges for road agencies that plan construction years ahead. “It’s going to cause some headaches for a lot of people… there will be a few years of lag time before we start seeing real results from this funding translated into system improvements,” Dennis said.
The report also raises structural concerns, particularly around Michigan’s complicated two-system funding model. A township receiving funding through the new Neighborhood Roads Fund won’t have to provide matching dollars, but a neighboring township receiving funds through the Michigan Transportation Fund might. “How would the county road commission know which dollars to assign that to? And how do they explain to the townships? It just speaks to the system is becoming more broke by doing things the way they have, not better,” he said.
While Dennis praised the move to exempt gas from the sales tax and shift revenue to the fuel excise tax, saying nearly everything paid at the pump will go to roads, he warned that large parts of the plan are short-lived. Grant funding shrinks from more than $205 million in 2026 to about 15 million in 2031, creating what he called a $200 million fiscal cliff.
Ultimately, he concluded that the Legislature added money without fixing underlying problems: “The legislature showed almost no interest in understanding how the current road program is working and which aspects of it are not working… shoring up an inefficient, ineffective system with more funding is not good policy.”
He said Michigan must rethink its entire road-funding model: “I think a future step really should take a comprehensive, rational look at everything that’s going on… I think that does suggest a complete repeal and replacement of Act 51.”
You can view the report here: crcmich.org
