COUNTY ROAD ASS'N OF MICHIGAN v. Governor

782 N.W.2d 784, 287 Mich. App. 95
CourtMichigan Court of Appeals
DecidedJanuary 12, 2010
DocketDocket 288653 and 288691
StatusPublished
Cited by26 cases

This text of 782 N.W.2d 784 (COUNTY ROAD ASS'N OF MICHIGAN v. Governor) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
COUNTY ROAD ASS'N OF MICHIGAN v. Governor, 782 N.W.2d 784, 287 Mich. App. 95 (Mich. Ct. App. 2010).

Opinion

O’CONNELL, J.

This case arises from plaintiffs’ opposition to decisions by defendants, state agents and agencies, to reallocate certain revenues in fiscal years 2001-2002 and 2002-2003 in an attempt to balance the state budget. Plaintiffs filed suit to prevent the transfer of these funds, claiming that they were constitutionally dedicated. After a bench trial, the Ingham Circuit Court ordered the restoration of certain transferred funds and required the state to perform a new cost-allocation *98 study to determine the cost of collecting certain constitutionally dedicated revenues. Both plaintiffs and defendants appealed this order, and we consolidated the appeals. We conclude that plaintiffs lack standing to pursue this cause of action and, therefore, we vacate the trial court’s order and remand for dismissal of this cause of action.

Plaintiff County Road Association of Michigan (CRAM) is a nonprofit corporation that represents the interests of the county road commissions or public works departments in all 83 Michigan counties. 1 The county road commissions receive distributions from the constitutionally mandated Michigan Transportation Fund (MTF) to maintain and construct roads within their respective counties.

On November 6, 2001, Governor John Engler issued Executive Order No. 2001-9, which was designed to reduce state expenditures by approximately $319 million. 2 One component of this executive order involved the transfer of approximately $144 million from various revenue funds to the state’s general fund in the upcoming fiscal year.

*99 Soon after this executive order was issued, plaintiffs filed a cause of action against the Governor and various state agents and agencies challenging the transfer of funds from the MTF on constitutional grounds. In particular, plaintiffs challenged the transfer of $40 million from the MTF to the Department of State (DOS), resulting in a transportation budget of $95,814 million for the 2001-2002 fiscal year, claiming that this transfer, combined with the amount previously appropriated to the DOS, created a total appropriation to the DOS that was in excess of what was necessary to cover expenses incurred in the collection of motor vehicle registration taxes and fees. In an amended complaint filed after the beginning of the 2002-2003 fiscal year, plaintiffs challenged the appropriation of $94.5 million from the MTF to the DOS, arguing that this appropriation also was more than was necessary to cover expenses for the collection of motor vehicle registration taxes and fees. Further, plaintiffs claimed that certain revenue that the DOS derived from the sale of data and information amassed from MTF funds must be used for transportation purposes.

Plaintiffs also challenged the transfer of $8 million from the MTF to the Department of Treasury (Treasury), claiming that this transfer was also “in excess of the expenses necessary for collection of specific taxes on motor vehicle and aviation fuels and that portion of the general sales tax imposed on motor vehicle fuel, parts and accessories designated by constitution for restricted transportation purposes.” Further, plaintiffs challenged the appropriation of $10,225 million from the MTF to the Treasury for the 2002-2003 fiscal year, arguing that this appropriation was also “in excess of expenses necessary for collection of motor vehicle registration taxes and fees.”

*100 Further, plaintiffs challenged the transfer to the state general fund of $12.75 million of sales tax revenue appropriated to the Comprehensive Transportation Fund (CTF), as well as the transfer to the general fund of $2.25 million of revenue acquired from the issuance of operator’s licenses and originally appropriated to the Transportation Economic Development Fund (TEDF), arguing that the Governor lacked the authority to reappropriate or transfer these funds by executive order and without appropriation by the Legislature because the use of these funds is restricted by Article 9, § 9 of the Michigan Constitution.

Plaintiffs also maintained that “[t]he Chippewa County Road Commission and all 83 Michigan counties have received reduced distributions from restricted transportation funds because of the improper transfers of restricted transportation funds as alleged.” They asked not only that the funds that they claimed were improperly transferred from the MTF, CTF, and TEDF be transferred back, but they also requested that the Governor’s reappropriation of these funds be declared unconstitutional and that the court “[e]njoin the Defendants from using MTF funds for purposes other than those permitted by Article IX § 9 and statute.”

About the time plaintiffs filed their second complaint, they moved to enjoin the transfer of $40 million to the DOS or the state general fund for the fiscal year 2002-2003, which would be used to cover expenses incurred in the collection of sales taxes. The trial court granted their motion in part, issuing a preliminary injunction precluding defendants from transferring $20 million from the MTF to cover expenses incurred in the collection of sales taxes, determining that only $20 million of the disputed amount constituted unnecessary collection expenses. Defendants asked for and were *101 granted leave to challenge the injunction on appeal, and this Court reversed the injunction in part. 3 Co Rd Ass’n of Michigan v Governor, unpublished opinion per curiam of the Court of Appeals, issued January 13, 2004 (Docket No. 245931).

Plaintiffs also moved for, and the trial court granted, a preliminary injunction precluding defendants from transferring funds from the CTF to the DOS, Treasury, or state general fund, as appropriated by Executive Order No. 2001-9, or restoring these funds if already transferred. This Court granted leave to appeal, vacated the preliminary injunction, and remanded the matter to the circuit court for entry of a judgment in favor of the defendants. 4 Co Rd Ass’n of Michigan v Governor, 260 Mich App 299; 677 NW2d 340 (2004). Our Supreme Court affirmed this Court’s decision, finding that certain sales tax revenues were not constitutionally dedicated for transportation-related purposes pursuant to *102 Const 1963, art 9, § 9 and, therefore, were properly subject to the Governor’s authority to reduce state expenditures. Co Rd Ass’n of Michigan v Governor, 474 Mich 11; 705 NW2d 680 (2005).

After the appeals concerning the preliminary injunction were resolved, this case proceeded to a bench trial. Proofs were presented, and the trial court issued a final opinion and order. In its final order, the trial court ordered that the state return $7.3 million from the general fund to the MTF to restore funds improperly appropriated or transferred to the DOS in fiscal year 2001-2002 to fund driver’s license appeals, driver improvement programs, and licensing of automobile dealers, and to return $6.5 million to the MTF to restore funds improperly appropriated to the DOS for these purposes in fiscal year 2002-2003.

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Bluebook (online)
782 N.W.2d 784, 287 Mich. App. 95, Counsel Stack Legal Research, https://law.counselstack.com/opinion/county-road-assn-of-michigan-v-governor-michctapp-2010.