MnDOT Releases Local Aid Estimates for Transportation Funding Proposals

There are three spreadsheets showing estimates based on the transportation funding proposals of the Senate, House, and governor.
(Published Apr 17, 2017)

Note: There is updated information on this topic. Read the latest article.

The Minnesota Department of Transportation (MnDOT) has created spreadsheets containing estimates of county state aid and municipal state aid for the Senate and House versions of the transportation finance bill, as well as Gov. Dayton's proposal.

View the estimates:

The Senate passed its omnibus transportation finance bill on March 30 on a vote of 38-28, with all republicans and four democrats voting for the bill. The House passed a similar but not identical measure on a vote of 75-54 on March 31. The bills will have to be reconciled by a conference committee.

To the disappointment of transportation advocates, neither bill contained increases to existing dedicated funding mechanisms such as the gas tax or license tab fees.

Both bills rely heavily on general fund shifts and borrowing. Nearly all the funds for roads and bridges provided in the bills would flow through the Highway User Tax Distribution Fund, which means dollars would be distributed through the constitutional formula.

League-supported city street funding bill not included
Although the House bill contains a base appropriation of $25 million in the 2018-2019 biennium for the Small Cities Assistance Account, and the Senate has a one-time appropriation of $10 million for this account, neither bill includes the city street funding proposal supported by city groups.

That proposal, introduced as HF 934/SF 933, imposes a $10 surcharge on license tab fees and motor vehicle title transfers and raises approximately $57 million annually. Half of the funds would be directed to the Small Cities Assistance Account, established by the 2015 Legislature, and half would be dedicated to a new Larger City Streets and Bridges Account. The funds would not be subject to the constraints of the Municipal State Aid (MSA) funds dedicated in the Minnesota Constitution.

Both the House and Senate proposals will rely on borrowing/bonding for transportation investments. The bonding provisions will be discussed in a future Cities Bulletin article as it becomes more clear which programs will be funded in the capital investment bills and which will be included in transportation packages.

SF 1060
On the Senate side, the omnibus transportation funding bill is SF 1060, authored by Sen. Scott Newman (R-Hutchinson). The measure calls for dedication of $200 million per year of existing taxes that currently flow to the state’s general fund for roads and bridges. The major funding shifts and the amounts they would provide for transportation in the 2018-2019 biennium are:

  • $246 million from the sales tax on auto parts.
  • $36 million from the 6.5 percent sales tax on rental vehicles.
  • $52.3 million from the 9.2 percent motor vehicle rental tax.
  • $64 million from the motor vehicle lease sales tax.

The bill also calls for $53 million in savings from “efficiencies” identified by the Minnesota Department of Transportation, and $117 million more from the department’s flex spending account.

The measure leaves a $65 million Metropolitan Council transportation budget deficit. It allows for more transit opt outs, and light rail transit operating cost eligibility to lines in operation or those with legislative approval. It also creates a Metro Mobility Task Force.

The bill provides base funding of about $25 million per biennium for the Local Bridge Program.

The bill was discussed and passed out of the Senate Transportation Finance and Policy Committee on March 22. It was passed by the Senate Taxes Committee on March 27.

HF 861
The House omnibus transportation bill is HF 861, authored by Rep. Paul Torkelson (R-Hanska). It would lean heavily on general fund dollars and borrowing for road and bridge projects across the state.

The so-called “Road and Bridge Act” would shift $228 million per year in transportation-related tax revenues from the general fund into a new account for road and bridge infrastructure projects. It also proposes $1 billion in trunk highway borrowing over four years and would institute a $75 annual surcharge on electric vehicles.

Existing revenues that would be shifted from the general fund into a new “Transportation Priorities Fund” in the 2018-2019 biennium are:

  • $296 million from sales tax on auto parts.
  • $64 million from the motor vehicle lease sales tax.
  • $52 million from sales tax on auto repairs.
  • $37 million from the sales tax on auto rentals.

The delete-everything amendment also includes a number of policy provisions that take direct aim at Metropolitan Transit operations, and current and future metro area light-rail transit projects.

Proposed transit and regional governance policy measures in the bill include:

  • Directing the Metropolitan Council to set an objective of 40 percent fare box recovery—the amount of operating costs recovered by paid fares—by 2022.
  • Requiring legislative approval before a regional rail authority, county, or city in the Twin Cities metropolitan area, or the Metropolitan Council, can spend funds on the study, project development or construction related to any light-rail transit project.
  • Prohibiting the Metropolitan Council from using certificates of participation or other debt obligations that are backed by motor vehicle sales tax revenues. The Metropolitan Council, Counties Transit Improvement Board, and Hennepin County Regional Rail Authority used a similar financing maneuver after state funding for the Southwest Light Rail Transit project fell through.

The measure was discussed and passed out of the House Transportation Finance Committee on March 23. It was passed by the House Taxes Committee on March 27.

League testifies
The League testified in House and Senate omnibus bill hearings, and expressed disappointment in the proposed bills. Specifically, the League raised three concerns:

  1. Minnesota cities support passage of an omnibus transportation funding bill that is comprehensive, multimodal, and sustainable. The bills as drafted do not meet these principles.
  2. The League’s highest transportation priority is to secure a dedicated funding source for city streets that are not eligible for Municipal State Aid under the constitutional formula, and neither bill accomplishes this.
  3. Money that flows through the constitutional formula (as most in the proposals would) disproportionately benefits the state and all of Minnesota’s 87 counties. When the state and counties make investments in roads and bridges, there are almost always cost participation obligations for cities, thus, their taxpayers. Given that these bills provide little in the way of new transportation money for cities, there is a strong likelihood that cities will divert funds from their own street systems to meet cost participation obligations in state and county projects.

If the bill that reaches the governor’s desk is not significantly modified to include dedicated revenue increases and more transit investments, most predict the governor will veto the bill.

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