Bill Summary – FastDemocracy

Legislative Analysis
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END PUBLIC TRANSIT AUTHORITY OPT-OUT
                                                                                         http://www.house.mi.gov/hfa
FOR MUNICIPALITIES IN WAYNE COUNTY
                                                                                         Analysis available at
House Bill 6088 as reported from committee                                               http://www.legislature.mi.gov
Sponsor: Rep. Alabas A. Farhat
Committee: Local Government and Municipal Finance
Complete to 12-7-24
SUMMARY:
         House Bill 6088 would amend the Public Transportation Authority Act to no longer allow
         municipalities in Wayne County to opt out of the county’s public transit authority (see
         Background, below) and to remove the five-year limit on taxes levied by public transit
         authorities.
         The act allows a public transportation authority, with voter approval, to levy a tax of up to five
         mills on all of the taxable property within the limits of the authority for authorized public
         transportation purposes. The tax may generally be levied for a period of up to five years, as
         determined by the authority, although a public transit authority may levy a tax for up to 25
         years for public transit services that include a fixed guideway project (projects that operate on
         a separate right-of-way exclusively for public transit or that include a rail or overhead rail
         system) authorized under the federal Capital Investment Grant (CIG) program.
         End Wayne County opt-out
         Under the act, a political subdivision (a county, city, village, or township) that is a member of
         a public transit authority or the portion of a city, village, or township that is a member of a
         public authority may be released from membership if certain conditions are met. Generally
         speaking, a political subdivision’s withdrawal must receive voter approval or the approval of
         the political subdivision’s legislative body and two-thirds of the public transit authority’s board
         members (not including those representing the political subdivision). 1 Withdrawal does not
         excuse entities from any previously authorized payment obligations, and the area continues to
         receive the transportation services until the political subdivision or portion thereof is no longer
         required to pay a tax levied by the authority.
         House Bill 6088 would exempt from these provisions political subdivisions within a county
         with a public transit authority authorized under the Public Transportation Authority Act and a
         population of at least 1.5 million, meaning that they could not opt out of membership. 2 The
         exemption would take effect after the county’s current public transit millage expires, at which
         time each political subdivision within the county would become a member of the public transit
         authority and be required to pay the millage, regardless of whether the political subdivision is
         a member before the bill takes effect.
1
  A political subdivision or other entity generally may withdraw without meeting these conditions until the expiration
of the thirtieth day following incorporation of the authority or the expiration of the thirtieth day after the entity is
notified that they are included in the authority.
2
  This exemption would only apply to Wayne County.
House Fiscal Agency                                                                                         Page 1 of 4
         End five-year millage limit
         Additionally, House Bill 6088 would remove the five-year limit for public transit authority
         millages, allowing the number of years that a tax could be levied to be set by the public transit
         authority. 3 (The 25-year exception for projects receiving CIG funding for a fixed guideway
         system would no longer be necessary and would also be removed.)
         MCL 124.458 et seq.
BACKGROUND:
         The state of Michigan provides local bus operating assistance to eligible public transit agencies
         through appropriations in the annual state transportation budget. This state assistance program
         is established in statute, specifically in section 10e of 1951 PA 1951 (“Act 51”). Although these
         eligible public agencies are commonly referred to as “public transit agencies,” they represent
         “eligible authorities and eligible governmental agencies” as defined in section 10c of Act 51
         through reference to the various statutes under which transit agencies are organized. There are
         80 local transit agencies eligible for state operating assistance under provisions of section 10e
         and the related definitions of section 10c. Of these 80 transit agencies that provide public transit
         services, 30 are organized under the Public Transportation Authorities Act. 4
        House Bill 6088 would amend Public Transportation Authorities Act. However, the bill would
        not affect any of the 30 transit agencies organized under that act that operate transit services.
        The bill would exempt a county with a population of 1.5 million or more from provisions that
        provide for political subdivisions to withdraw, or opt out, of the Public Transportation
        Authorities Act authority. Because only Wayne County meets that population threshold, the
        bill would apply only to the Wayne County Transit Authority. The Wayne County Transit
        Authority does not exist as an operating entity. It is effectively a shell organization established
        to levy and collect property taxes (the transit millage) within Wayne County on behalf of the
        Suburban Mobility Authority for Regional Transportation, (SMART), a regional transportation
        authority organized under the Metropolitan Transportation Authorities Act. Although the bill
        would amend the Public Transportation Authorities Act, it effectively only affects SMART, an
        authority organized under the Metropolitan Transportation Authorities Act.
         SMART provides public transportation services in Wayne, Oakland, Macomb, and Monroe
         Counties. Although SMART has no scheduled routes that both begin and end within the city
         of Detroit, SMART buses do provide express bus service between suburban communities and
         downtown Detroit. SMART operating costs not covered by farebox revenue are primarily
         funded by state operating assistance and by the transit millage levied in all of Macomb County,
         all of Oakland County, and portions of Wayne County excluding the city of Detroit.
         The millage in Wayne County is levied and collected through the Wayne County Transit
         Authority. Because of this form of organization, a number of political subdivisions (cities,
         villages, and townships) in Wayne County have opted out of the transit millage and do not
         receive regular transit service through SMART. As noted, House Bill 6088 would effectively
3
  A provision that currently allows a political subdivision, with voter approval, to make financial obligations for a
period of over five years would also expire once the bill takes effect.
4
  For additional information on local bus operating assistance and the organization of public transit agencies, see:
Fiscal Brief: The Comprehensive Transportation Fund (CTF) and State Support for Local Public Transportation -
August 8, 2023
House Fiscal Agency                                                              HB 6088 as reported     Page 2 of 4
       eliminate the ability of these Wayne County political subdivisions to opt out of the millage,
       and effectively require all Wayne County political subdivisions to become a member of the
       Wayne County Transit Authority, after the county’s public transportation millage in effect on
       the effective date of the bill expires.
       Note that Macomb County participates in SMART under the authority of the Revenue Bond
       Act, which allows public corporations to make public improvements, including transportation
       systems. Many county public transportation systems are organized under provisions of that act.
       Because Macomb County is a member of SMART as a county, the county votes on transit
       millage requests as a county and all property in the county is assessed the millage. There are
       no opt-out communities in Macomb County.
       For many years, both Oakland County and Wayne County participated in SMART through
       authorities organized under the Public Transportation Authority Act: respectively, the Oakland
       County Public Transportation Authority and the Wayne County Transit Authority. However,
       on November 8, 2022, Oakland County voters approved a 10-year, 0.95-mill countywide
       Oakland County public transportation millage to replace an expiring millage levied by the
       Oakland County Public Transportation Authority. Passage of this countywide millage, and
       implementation of multiple interlocal public transportation agreements, effectively provided
       for countywide transit service in Oakland County and eliminated opt-out areas. The initial
       interlocal public transportation agreement was approved by the Oakland County Board of
       Commissioners on February 16, 2023, and approved by the SMART Board of Directors on
       February 23, 2023.
       Currently, Wayne County is the only county within SMART with opt-out communities.
       The transit millage generated $87.8 million for SMART operations in the fiscal year ending
       June 30, 2023.
BRIEF DISCUSSION:
       According to committee testimony, transit access in Wayne County depends on which part of
       the county a person lives in, as 17 out of 43 communities in Wayne County—representing
       500,000 residents—have opted out of the transit millage. The lack of bus access for these opt-
       out communities has resulted in a patchwork of services that is inadequate for getting people
       where they need to go, especially for students, seniors, and people with disabilities. Supporters
       of House Bill 6088 believe that the state’s largest county should have more robust bus services
       and argue that the bill would empower Wayne County to collectively invest in a transit system
       by removing the ability for communities to opt out. They highlight that a majority of voters
       would still have to approve the renewal of the transit millage, meaning that voters throughout
       Wayne County would have a direct say in whether to continue funding public transit services.
FISCAL IMPACT:
       House Bill 6088 would have no direct impact on state revenues or expenditures. In addition,
       the bill would have no direct impact on local units of government generally, including local
       public transit agencies, other than SMART. To the extent that the bill would provide for a
       countywide transit millage and eliminate opt-out communities in Wayne County, sometime
       after 2025, the bill could increase revenue for credit to SMART. The amount of additional
       revenue cannot be readily estimated at this time.
House Fiscal Agency                                                     HB 6088 as reported   Page 3 of 4
       Representatives of SMART identified 17 Wayne County “opt-out” local units of government,
       including the city of Detroit. The city of Detroit is in a somewhat different position as compared
       to the other Wayne County opt-out communities. While the city is not currently included in the
       transit millage levied and collected by the Wayne County Transit Authority, it does contribute
       from its own city general fund to support transit services provided by the Detroit Department
       of Transportation. For the fiscal year ending June 30, 2023, the city transferred $73.4 million
       from the city general fund to the city transportation fund.
       To the extent that the bill results in an increase in SMART revenue, it could have a marginal
       impact on the formula distribution of local bus operating assistance—a distribution formula
       largely driven by local agency funding support. However, the impact cannot be readily
       estimated at this time, and there are a number of other factors affecting the formula distribution.
       It appears that after the bill’s provisions become effective, the city of Detroit also would
       become subject to the transit millage as imposed and collected by Wayne County. The city
       could then elect to reduce its own general fund contributions for transit services, or work with
       SMART to increase service in the city.
POSITIONS:
        Representatives of the following entities testified in support of the bill (11-14-24):
           • Detroit Regional Chamber
           • Transportation Riders United
           • Wayne County
        The following entities indicated support for the bill (11-14-24):
           • Amalgamated Transit Union
           • Michigan Environmental Council
           • Regional Transit Authority of Southeast Michigan
           • United Food and Commercial Workers Local 876
                                                            Legislative Analyst: Holly Kuhn
                                                                 Fiscal Analyst: William E. Hamilton
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency                                                       HB 6088 as reported    Page 4 of 4
Statutes affected: 
Substitute (H-1): 124.458
House Introduced Bill: 124.458
As Passed by the House: 124.458