Appropriations subcommittee briefed on October 2025 transportation package; new neighborhood road fund shifts funds to counties and cities

At a meeting of the Appropriations Subcommittee on State and Local Transportation, House Fiscal Agency fiscal clerk William Hamilton briefed members on the October 2025 seven‑bill transportation funding package and its likely effects on state and local road funding.

Hamilton framed the package as producing two separate impacts: changes to the Michigan Transportation Fund (MTF) and the creation of a new neighborhood road fund with its own distribution model. "The motor fuel tax is now 52.4¢ per gallon," Hamilton said, citing the 20¢ statutory increase plus an inflation adjustment that takes effect Jan. 1, 2026.

The change to the fuel tax is estimated to generate roughly $1,073,000,000 on a 12‑month basis credited to the MTF, Hamilton said, but the package also eliminates a $600,000,000 individual income tax credit that had previously flowed to the MTF. He reported the net 12‑month MTF change would be about $350,500,000 but that FY2026 will show a much smaller recognized amount (roughly $33,700,000) because the fuel tax is effective Jan. 1 and collections are recognized with a…