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Ann Arbor staff preview FY27 transportation budget; state gas tax changes expected to shift funding
Summary
Finance staff outlined the city’s FY27 transportation funding picture, citing state changes to Act 51 and a January gas-tax increase that will alter revenue flows and boost alternative-transportation allocations; a new neighborhood-roads state fund remains uncertain.
Ed Eder, the city’s public‑services financial manager, presented a preview of the proposed FY27 budget to the Transportation Commission on April 15, highlighting the transportation revenue picture and spending priorities.
Eder said the citywide proposed budget totals about $649.8 million. For transportation he walked commissioners through the effects of recent state-level changes to Act 51 funding and a 19-cent gas-tax increase effective Jan. 1 that will change the long-term growth profile for major and local street funds. He noted a temporary dip in FY26 estimates tied to legislative changes earlier in the year.
Eder said the city’s planned expenditure allocation for major and local streets in FY27 is approximately $26.2 million, with the largest portions directed to right-of-way maintenance (resurfacing, winter maintenance), traffic control (signals, signs, markings) and debt service. He highlighted transfers into the alternative-transportation fund and itemized draft allocations: street right placement, crosswalk lighting upgrades, traffic calming, about $3.5 million for sidewalk construction, and a proposed $1.35 million earmark for a speed-management program.
Staff also reviewed the street, bridge and sidewalk millage components and warned that FY27 is the last year under the current millage village; renewal efforts are underway. A new state neighborhood-roads fund was discussed; staff estimated Ann Arbor’s share might be about $4.5 million next fiscal year, but cautioned that litigation over the marijuana wholesale tax and timing rules make that revenue uncertain.
During discussion, commissioners asked for more detail on how transportation expenditure decisions are allocated across engineering and transportation staff responsibilities; staff explained that some pots of money and prioritization processes are controlled by engineering and that the proposed speed-management buckets are intended to give transportation staff discretionary funds for quick builds, design and grant matches, and construction funding.
Eder said final budget details will be presented by the city administrator on Monday and that the commission’s role will be advisory on allocations affecting transportation.
