Metro Detroit Transit Tax Assumes Funding From State and Feds That May Never Come

Officials with state and federal transportation agencies say they did not review funding assumptions for the Regional Transit Authority of Southeast Michigan's $4.6 billion metro Detroit transit tax proposal. If approved by voters on the Nov. 8 ballot, the measure will impose a 20-year, 1.2-mill property tax increase on property owners in Oakland, Macomb, Wayne and Washtenaw Counties.

The Regional Transit Authority’s spending plan assumes that some funds will come from both the Michigan Department of Transportation (MDOT) and the Federal Transit Administration (FTA). The money will mainly be used to expand municipal bus service in the region.

“Total state formula funding for transit in Southeast Michigan is anticipated to increase from $96.9 million in 2015 to $118.8 million (2016$) in 2036, a 23% increase above inflation,” the plan said.

MDOT officials say they have not reviewed the RTA’s plan and could not evaluate the projected budget figures.

The plan also says: “Because the RTA will be facilitating capital projects, it is also assumed to receive an increasing level of state capital assistance funding. The share is not a fixed percentage but rather is tied to specific projects for which state support is likely.”

MDOT could not say what future appropriations will be since those are at the discretion of Michigan’s legislature.

“We do not know if the (appropriations) will or will not be sufficient to meet all the capital match needs,” MDOT said.

The RTA plan also assumes its share of federal transportation dollars will increase substantially, from approximately $59 million in 2015 to $79.3 million in 2036 (using constant 2016 dollars).

In addition to expanded bus routes, the RTA plan proposes to institute rail service between Ann Arbor and downtown Detroit. This would make the authority eligible for federal grants after the planned rail service begins operations in 2022.

The FTA did say that the federal road funding law expires in 2020. This does not necessarily mean the grant programs will not be renewed, however.

The RTA’s spending and property tax plan covers a 20-year period, running until 2036.

Mario Morrow, a spokesman for the RTA, says the RTA works with MDOT and the federal agency, but neither was involved in calculating the project's revenues.

“The RTA works with both MDOT and FTA very closely,” he said. “Neither agency actively participates in projecting revenues for any transit agency doing a 20-year plan. Given that fact, we took advice from those agencies to work independently to develop state and federal funding assumptions based on the best available information.”

“The RTA developed the federal and state assumptions based on conservative assumptions of growth in those sources,” Morrow added. “The RTA recently adopted financial policies to help them manage resources and adjust the plan to reflect any changes in assumed revenues or expenditures.”

Morrow said the adjustments to the plan were not in response to a critical report commissioned by Oakland County.

The county’s report said the plan had “numerous financial flaws” and that the budgetary assumptions were “overly simplistic, erroneous and demonstrates the lack of understanding by the RTA administration of the Michigan property tax statutes.”

Leon Drolet, treasurer of No Massive Transit Tax, which opposes the plan, said it looks like the RTA doesn’t think it needs the state and federal organizations.

"It appears the RTA doesn't think it really needs the FTA and MDOT to sell a plan that relies on those agencies,” he said. "The RTA acts as if they are free to make any assumption because they don't think they will be challenged and they don't think voters will be able to deeply analyze the plan."

James Hohman, assistant director of fiscal policy for the Mackinac Center for Public Policy, said taxes would be raised if the plan is passed, yet returns on the transit expansion are unknown.

“It is difficult to make an accurate long-term forecast when annual political approval is required. The plan is certain to raise taxes. But it is uncertain what taxpayers will ultimately get in return.”