Michigan panel hears that state transit funding lags rising costs and demand

Lansing — The Michigan House Appropriations Subcommittee on State and Local Transportation heard testimony in May 2025 that state funding for public transit has not kept pace with rising operating costs and ridership demand, leaving local transit agencies to fill growing budget gaps.

Bill (fiscal staff) opened the briefing with an overview of how state transportation dollars flow into public transit, telling the panel the primary state sources are the Michigan Transportation Fund (MTF) and an earmark into the Comprehensive Transportation Fund (CTF). "The CTF also receives an earmark of auto related sales tax," Bill said, and those two revenues together "add up to about $400,000,000." He described local bus operating (LBO) as a major line item and noted that recent federal COVID-relief appropriations were included in 2024 and 2025 figures.

The discussion matters because state appropriations determine how much local agencies can cover of their eligible operating expenses. "The distribution follows a formula ... established in Act 51," Bill said, summarizing statutory ceilings that allow urbanized agencies to receive up to 50% of eligible operating expense and nonurban agencies up to 60%, while noting actual state shares have fallen: "in 2025 it's estimated that urbanized agencies will receive ... 29% of their eligible operating expense, and non urban agencies will receive 34%."

Jean Rustemond, administrator of the Office of Passenger Transportation at the Michigan Department of Transportation (MDOT), told the committee MDOT splits the CTF roughly 60/40 between the Office of Passenger Transportation…