Transportation advocates hoped the Senate’s more substantive funding package would prevail, but that hope faded over the final weekend of the session. (Published May 28, 2013)
Transportation advocates had held out hope that a transportation funding package passed by the Senate on May 10 would prevail in conference committee. It included an increase in both the metro area sales tax for transit purposes and the state gas tax. Instead, the conference committee report contained a hefty bonding provision, new taxing authority for counties, and a change in distribution of motor vehicle leased sales tax revenue.
Although the governor has not yet signed the bill, it is expected that he will do so. Below is a summary of the primary provisions in the bill, Chapter 117:
Wheelage tax expansion. All 87 counties are now authorized to levy a $10 per vehicle wheelage tax. Previously, only the seven counties in the Twin Cities metropolitan area were authorized to levy this tax and the law included a $5 per vehicle cap. The new legislation increases the amount to $10—an automatic change in those five counties that currently levy the tax—with the ability to impose a rate of up to $20 per vehicle in 2018 and subsequent years.
Removal of referendum requirement. For Greater Minnesota counties that were granted the authority to levy a local option sales tax for transportation, the requirement to hold a referendum prior to enacting the tax is now removed. The transportation funding bill passed in 2008 provided authority for counties outside the Twin Cities metropolitan area to levy a sales tax of up to a half cent for a specific transportation project. Now counties will be able to levy that tax by county board resolution. The language was also changed on the use of the funds so that the funds may be used for both capital and operating costs for transit as well as capital costs related to the Safe Routes to School program.
Corridors of Commerce Program created. While no ongoing funding is included, the Corridors of Commerce Program is established in law and $300 million in trunk highway bonds are authorized for the program. The bond authorization is not effective until July 1, 2014. This program is designed to channel funds to state highway projects that improve commerce in the state. The Minnesota Department of Transportation (MnDOT) is directed to establish a process for project selection that involves accepting recommendations on candidate projects from area transportation partnerships and other interested stakeholders in each MnDOT district. Candidate projects would be classified as Capacity Development—two-lane segments in corridors with four-lane segments, or Freight Improvement.
Transportation Economic Development Program (TED). The bill establishes the TED program in state statute with language similar to previous language regarding the goals and criteria for TED. The bill directs $10 million per year or $20 million for the biennium in existing trunk highway dollars to TED.
One-time funding increases:
$37 million in general fund dollars are provided for the Southwest Light Rail Transit line. This funding allows the project to keep moving in anticipation of additional construction dollars.
$18 million in general fund dollars to the Metropolitan Council to deal with operating costs for transit. The base level of funding for transit operations is increased by $11.7 million per year in the following two years or $23.4 million for the fiscal year (FY) 2016-17 biennium.
Grants for the cost of providing free transit rides to disabled veterans in Greater Minnesota ($256,000) for the biennium, also included in FY 2016-17 biennium.
Safe Routes to Schools—$500,000 for the biennium, also included in the planning for FY 2016-17.
State road construction:
MAP-21 increase in federal funding of $125.4 million in FY 2014 and $137.6 million in FY 2015.
$95 million in one-time increase from the Trunk Highway Fund balance.
Change in distribution of motor vehicle leased sales tax revenue. For FY 2014-15 only, the bill changes current law, which provides that after the first $32 million in revenue from the sales tax on leased vehicles is deposited in the general fund, the remaining dollars are split 50/50 between Greater Minnesota transit and five of the seven metro counties (excluding Hennepin and Ramsey) for use on county highways. The new language directs the split of the remaining funds after the deposit of $32 million to the general fund to be shared with $9 million for county highways in the five metro counties and the rest of the money directed to Greater Minnesota transit. This change is estimated to increase funding for Greater Minnesota transit by $10.8 million.
MVST loopholes closed. The legislation changes the current exemption from paying the motor vehicle sales tax (MVST) for gifts between individuals so that only gifts among family members will be exempt from the MVST payment. The bill also increases the tax on collector vehicles from a flat $90 per year to $150 per year to account for the number of years this fee has remained the same. This provision was supported by the Transportation Alliance and included in a transportation funding bill the League worked to have introduced (HF 1449).
The bill does not include the authority for cities to create a street improvement district and it does not increase the motor vehicle sales tax rate to 6.875 percent as had been included in the bill as it was passed in the Senate Transportation Committee.
Gov. Mark Dayton’s stated firm opposition to increasing the state’s gas tax led to the scaled-back bill that lawmakers passed.
Note: This article contains information provided by the Minnesota Transportation Alliance.
Contact Anne Finn Assistant IGR Director (651) 281-1263 or (800) 925-1122 email@example.com
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