Senate Passes Permanent Small Cities Assistance Account Funding Bill

May 2, 2022

The bill would give an estimated $22 million per year to the Small Cities Assistance Account, which provides street funding to cities with populations below 5,000.

SF 3086, a bill that contains a provision that would provide dedicated funding for the Small Cities Assistance Account, was passed off the Senate floor on a vote of 59-7 on April 28. The League testified in favor of the bill and provided a letter of support as it advanced through the committee process.

Read the League’s written testimony (pdf)

The measure, authored by Sen. Jeff Howe (R-Rockville), dedicates 100% of the auto parts sales tax to transportation and, as amended, carves out 7% of the proceeds for the Small Cities Assistance Account.

The Small Cities Assistance Account is a formula-based program that provides street funding to cities with populations below 5,000. These cities do not receive funding under the constitutional formula that distributes funds for roads and bridges.

The provisions in SF 3086 are also contained in the Senate’s omnibus state government, transportation, and veterans policy and supplemental appropriations bill, SF 3975, authored by Sen. Mary Kiffmeyer (R-Big Lake).

The House companion, HF 3646 (Rep. Chris Swedzinski, R-Ghent), has not been scheduled for a hearing. However, the House omnibus state government, veterans, pensions, and transportation bill, HF 4293 (Rep. Mike Nelson, DFL-Brooklyn Park), appropriates $10 million per year for the Small Cities Assistance Account in fiscal years 2023, 2024, and 2025.

Funding estimate

An identical bill, SF 3081 (Sen. Scott Newman, R-Hutchinson), was also heard earlier in the legislative session by the Finance Committee. According to a spreadsheet provided with that bill, if the measure passes in its present form, the Small Cities Assistance Account would receive over $22 million per year. Another 7% would go to townships, and the remaining 86% would be deposited into the Highway User Tax Distribution Fund (HUTDF).

Existing law provides that the first $12.137 million per month (approximately $145.6 million per year) in revenues from the sales tax on auto parts must be deposited into the HUDTF.

Governor’s proposed funding

Gov. Tim Walz announced March 21 that his supplemental budget includes $10 million per year in ongoing funding for the Small Cities Assistance Account.

For more background information about this bill, read a previous article.

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