By Bruce Rolfe
The Road Commission of Kalamazoo County and local municipalities will likely have to wait until 2027 to learn how much revenue from a new road funding source coming from the State of Michigan will be available to each unit.
The new source of revenue is coming from Michigan’s new Neighborhood Roads Fund (NRF).
Road Commission of Kalamazoo County Managing Director Travis Bartholomew said there is not enough information available to determine how much each municipality will receive with the new funding, however there will be some impact immediately.
Bartholomew said the only notable financial effect to date has been a significant reduction in Michigan Transportation Fund (MTF) revenue, resulting from the elimination of $600 million in income tax dollars previously earmarked for transportation, effective October 1, 2025.
RCKC reports sales tax on gasoline has been eliminated and replaced with a 20-cent-per-gallon increase in the gas tax, as of January 1, 2026, keeping overall pump prices roughly the same. The local Road Commission adds that unlike before, all taxes collected at the gas pump will now be dedicated to roads, rather than being diverted to non-transportation purposes.
Neighborhood Roads Fund and New Revenue Sources
RCKC adds several new revenue streams will fund the NRF, but timelines for distribution to local road agencies remain unclear.
Those new revenue streams include:
• Corporate Income Tax Revenue: Up to $1 billion annually by 2030 will be dedicated to road funding. This includes revenue from delayed corporate tax breaks and a permanent shift of $500 million per year from the Governor’s SOAR economic development fund into the NRF.
• Marijuana Wholesale Tax: A new 24% wholesale tax on marijuana is projected to generate roughly $420 million per year, though this revenue is uncertain due to an active lawsuit from the industry’s trade association.
• NRF Projections: The NRF is expected to receive up to $1.1 billion in the current fiscal year, with allocations increasing annually until the fund reaches slightly more than $2 billion by 2030.
Distribution of Road Dollars and Targeted Allocations
RCKC said before general distribution, the state will reserve funds for specific projects:
• $100 million per year (FY 2026–FY 2030) for critical and restricted bridges, overseen by the Local Bridge Advisory Board.
• Additional set-asides for grade-separation projects, infrastructure grants, and rail safety projects.
These earmarks are taken “off the top” before the remainder is distributed to local and state agencies.
General NRF Distribution (FY 2026–FY 2030)
According to RCKC, after targeted allocations, the remaining NRF revenue is divided as follows:
52% to county road commissions
28% to cities and villages
20% to the State Trunkline Fund
Distributions to counties and municipalities are based on the number of road miles they maintain, with every county road commission guaranteed a minimum of $100,000 per year.
Changes After 2030
Beginning in FY 2031, the distribution formula shifts:
47.36% to counties
38.75% to cities and villages
13.89% retained within the NRF
By then, major categorical set-asides—such as the $100 million bridge reserve—will sunset, allowing more revenue to flow directly to local road agencies.
Bartholomew said while the funding structure is now in place, it still remains to be determined when the new funding dollars actually reach the local road commission, allowing RCKC to begin addressing critical road and infrastructure needs.
Bartholomew said there is no exact amount that will be generated, and due to the uncertainty surrounding the wholesale marijuana tax, anticipated revenue could be reduced by up to 40%. He adds based on current projections, if all funding sources for this road package perform as expected, RCKC could see approximately a 35% increase in MTF, which equates to roughly $8.5–$9 million annually.
The RCKC Managing Director adds the RCKC’s current projected MTF revenue for 2026 is 28 million, however he doesn’t anticipate the new road funding dollars will be available until 2027.
The Road Commission of Kalamazoo County and local municipalities will likely have to wait until 2027 to learn how much revenue from a new road funding source coming from the State of Michigan will be available to each unit.
The new source of revenue is coming from Michigan’s new Neighborhood Roads Fund (NRF).
Road Commission of Kalamazoo County Managing Director Travis Bartholomew said there is not enough information available to determine how much each municipality will receive with the new funding, however there will be some impact immediately.
Bartholomew said the only notable financial effect to date has been a significant reduction in Michigan Transportation Fund (MTF) revenue, resulting from the elimination of $600 million in income tax dollars previously earmarked for transportation, effective October 1, 2025.
RCKC reports sales tax on gasoline has been eliminated and replaced with a 20-cent-per-gallon increase in the gas tax, as of January 1, 2026, keeping overall pump prices roughly the same. The local Road Commission adds that unlike before, all taxes collected at the gas pump will now be dedicated to roads, rather than being diverted to non-transportation purposes.
Neighborhood Roads Fund and New Revenue Sources
RCKC adds several new revenue streams will fund the NRF, but timelines for distribution to local road agencies remain unclear.
Those new revenue streams include:
• Corporate Income Tax Revenue: Up to $1 billion annually by 2030 will be dedicated to road funding. This includes revenue from delayed corporate tax breaks and a permanent shift of $500 million per year from the Governor’s SOAR economic development fund into the NRF.
• Marijuana Wholesale Tax: A new 24% wholesale tax on marijuana is projected to generate roughly $420 million per year, though this revenue is uncertain due to an active lawsuit from the industry’s trade association.
• NRF Projections: The NRF is expected to receive up to $1.1 billion in the current fiscal year, with allocations increasing annually until the fund reaches slightly more than $2 billion by 2030.
Distribution of Road Dollars and Targeted Allocations
RCKC said before general distribution, the state will reserve funds for specific projects:
• $100 million per year (FY 2026–FY 2030) for critical and restricted bridges, overseen by the Local Bridge Advisory Board.
• Additional set-asides for grade-separation projects, infrastructure grants, and rail safety projects.
These earmarks are taken “off the top” before the remainder is distributed to local and state agencies.
General NRF Distribution (FY 2026–FY 2030)
According to RCKC, after targeted allocations, the remaining NRF revenue is divided as follows:
52% to county road commissions
28% to cities and villages
20% to the State Trunkline Fund
Distributions to counties and municipalities are based on the number of road miles they maintain, with every county road commission guaranteed a minimum of $100,000 per year.
Changes After 2030
Beginning in FY 2031, the distribution formula shifts:
47.36% to counties
38.75% to cities and villages
13.89% retained within the NRF
By then, major categorical set-asides—such as the $100 million bridge reserve—will sunset, allowing more revenue to flow directly to local road agencies.
Bartholomew said while the funding structure is now in place, it still remains to be determined when the new funding dollars actually reach the local road commission, allowing RCKC to begin addressing critical road and infrastructure needs.
Bartholomew said there is no exact amount that will be generated, and due to the uncertainty surrounding the wholesale marijuana tax, anticipated revenue could be reduced by up to 40%. He adds based on current projections, if all funding sources for this road package perform as expected, RCKC could see approximately a 35% increase in MTF, which equates to roughly $8.5–$9 million annually.
The RCKC Managing Director adds the RCKC’s current projected MTF revenue for 2026 is 28 million, however he doesn’t anticipate the new road funding dollars will be available until 2027.
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