Introduction to MnDOT Finances

Transportation Finance Advisory CommitteeMay 18, 2012

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Department of Transportation (MnDOT)• Multimodal Systems (Air, Transit, Freight, Rail)• State Roads• Local Roads• Agency Management (includes funding for MnDOT facilities)

Metropolitan Council• Metro Transit – Bus, Light Rail and Commuter Rail• Contracted Transit Programs• Transportation Planning

Department of Public Safety• State Patrol• Driver and Vehicle Services• Traffic Safety• Pipeline Safety• Administration and Support

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Transportation Funds:Highway User Tax Distribution Fund (HUTD)Trunk Highway Fund (TH)County State-Aid Highway Fund (CSAH)Municipal State-Aid Street Fund (MSAS)Transit Assistance Fund (TAF)State Airports Fund

General Fund:PortsPassenger RailGreater Minnesota Transit

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(Transportation as a whole receives less than 0.5% of State GF)5

Minnesota Constitution, Article XIV◦ Created all transportation funds

◦ Authorizes taxes on motor fuels, motor vehicle registration, and motor vehicle sales

◦ Dedicates taxes on motor fuels and motor vehicles to the HUTD fund

◦ For motor vehicle sales taxes, dedicates “not more than 60 percent” to the HUTD and “not less than 40 percent” to public transit

◦ Authorizes trunk highway bonds6

Constitution requires that the following revenues must be deposited into the HUTD and used for only highway purposes:

Motor Fuels Tax (Gas Tax) – 100%Vehicle Registration Tax (Tab Fees) – 100%Motor Vehicle Sales Tax (MVST) – Not more than 60%

The current split of the funds within HUTD is: Gas Tax 48% Registration Tax 33% 60% Motor Vehicle Sales Tax (MVST) 19% Other Sources 0%

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The HUTD Fund is distributed as follows:

◦ 95% Distribution:62% to the Trunk Highway Fund29% to the County State-Aid Highway Fund9% to the Municipal State-Aid Street Fund

◦ 5% Distribution (5% Set Aside):30.5% to town roads16% to town bridges53.5% to flexible highway account (turnbacks, etc.)

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Highway User Tax Distribution Fund

THF(62%)THF

(62%)CSAH(29%)CSAH(29%)

Flexible Highway Account(53.5%)

Flexible Highway Account(53.5%)

MSAS(9%)MSAS(9%)

Town Roads

(30.5%)

Town Roads

(30.5%)

Town Bridges(16%)

Town Bridges(16%)

95% Distribution95% Distribution 5% Set Aside5% Set Aside

Gas Tax$846MGas Tax$846M

Tab Fees

$557M

Tab Fees

$557M

Motor Vehicle Sales Tax

$276M

Motor Vehicle Sales Tax

$276M

Other$4M

Other$4M

DNRDNR

Article XIV of the Minnesota Constitution

Constitutional requirement: 100% of gas tax revenues must be deposited in Highway User Tax Distribution Fund (HUTD), spent only for “highway purposes”

Current rate is 25 cents per gallon, plus a 3.0 cent surcharge dedicated to trunk highway debt service (this surcharge will increase to a maximum of 3.5 cents on July 1, 2012)

Last increase: 2008 (from 20 cents to 25 cents, plus the 3.0 cent surcharge)

Previous increase: 1988 (from 17 cents to 20 cents)

In FY 2011, the gas tax collected $846 million, or $30.8 million per penny of tax

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Cents per Gallon

Federal

MN WI SD IA ND

Gasoline 18.4 28.0 30.9 22.0 21.0 23.0Diesel 24.4 28.0 30.9 22.0 22.5 23.0Gasohol (10% blend)

18.4 28.0 30.9 20.0 19.0 23.0

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Gasoline Excise Tax

Total State State + Federal

Minnesota 28.0 28.1 46.5

US Average 20.9 31.1 49.5

Rank8th highest(out of 51)

19th highest (out of 51)

19th highest (out of 51)

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Constitutional requirement: 100% of registration tax revenues must be deposited in (HUTD), spent only for “highway purposes”

Passenger vehicles pay based upon age and value:◦ $10 plus 1.25% of base value (subject to

depreciation schedule)

Vehicles 11 years and older pay $35 (min rate)

Trucks pay based upon weight and age

In FY 2011, registration tax raised $557 million

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Until FY 2002, 100% of MVST revenues deposited in general fund

In FY 2002, HUTD began to receive a percentage of MVST

In FY 2003, the legislature eliminated the use of local property taxes for transit operations, and instead dedicated a percentage of MVST to metro and rural transit

2006 constitutional amendment requires 100% of MVST revenues to be dedicated solely to transportation purposes by FY2012

Statutory allocation of MVST revenues in FY 2012: ◦ 60% to HUTD, 36% to metro transit, 4% to greater MN transit

In FY 2011, MVST raised $505 million18

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The Trunk Highway Fund receives 58.9% of the HUTD revenues (62% of the 95% distribution)

In FY 2011, total revenue to the TH was $1.6 billion, including $971 million from the HUTD and $526 in federal aid

Revenue in the TH is allocated through legislative appropriations. In FYs 2012-13:◦ 84% to MnDOT for construction and maintenance

activities◦ 6% to the Department of Public Safety (State Patrol)◦ 10% to debt service

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Proceeds only used for “trunk highway purposes,” must be deposited in Trunk Highway Fund

MnDOT Debt Management guidelines: THF debt service should not exceed 20% of annual state revenues

Debt service on Trunk Highway bonds paid from the Trunk Highway Fund

Article XIV, Section 11 of the Minnesota Constitution

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YearTotal Debt Service (1)

Estimated Current %

Variance from 20%

Policy Limit (2)

2012 $86.6 M 7.9% $131.8 M2013 140.2 12.6% 82.92014 171.2 15.1% 55.42015 194.0 16.8% 37.22016 199.3 17.2% 31.92017 $199.6 M 17.3% $31.6 M

(1) Includes bond debt transfers, transportation revolving loans, and local area advances.(2) Represents amount of additional debt service to reach 20% limit

Minnesota Department of TransportationDebt Management Policy

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General Obligation (GO) Bonds:◦ Used to fund non-trunk highway transportation

projects, such as transitways, commuter rail, local bridges and roads

Debt service on General Obligation (GO) bonds paid from the General Fund

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Federal Aid Highway Program is a reimbursable program and allocated to MN cased on formula

Reimbursements for trunk highway projects are deposited into the Trunk Highway Fund’

FY 2011 federal revenues to the TH were $525.5 million

Separate federal funding is allocated for transit, rail, aeronautics and local road projects; these amounts are primarily deposited into the state’s Federal Fund

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DPS also receives a significant amount of their funding from the TH Fund for the following activities:Driver and Vehicle Services

◦ Fee-based operations budget (two operating accounts in Special Revenue Fund)

State Patrol◦ Funded primarily from trunk highway fund◦ Capitol Security funded from General Fund◦ Vehicle Crimes Unit (2010) funded from HUTD Fund

Traffic Safety◦ Funded through special revenue and trunk highway appropriation

(required match for federal funding)Pipeline Safety

◦ Funded through USDOT grant and through pipeline safety inspection fees

Administration30

Debt Service

Cash Balance

Fund Balance

Advanced Construction

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The County State-Aid Highway (CSAH) Fund receives 27.55% of the total revenues in the HUTD (29% of the 95% distribution)

In Chapter 152, an additional formula was created to govern distribution of new revenues attributable to that legislation, called the “excess sum:”

40% based on share of vehicle registrations60% based on construction needs

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A portion of motor vehicle lease sales tax (MVLST) is statutorily dedicated to greater MN transit, after offsets to the General Fund; ◦ received $5.2 million in FY 2011 (first year this money was received),

projected to receive $5.8 million in FY 2012, increasing to $9.0 million in FY 2015

The CSAH revenues are distributed to the state’s 87 counties through a statutory formula as follows:

10% equally to each county 10% based on each county’s proportional share of vehicle

registrations 30% based on each county’s proportional share of CSAH lane-miles 50% based on each county’s share of 25-year construction needs

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The Municipal State-Aid Street Fund (MSAS) Fund receives 8.55% of the HUTD revenues (9% of the 95% distribution)

The MSAS revenues are distributed to cities with a population over 5,000 (currently 142 cities) through a statutory formula as follows:

50% based on each city’s population 50% based on each city’s 25-year construction needs

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Aeronautics

Transit

Freight &Commercial Vehicles

Passenger Rail

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Funded, with dedicated revenues from:◦ aviation fuel taxes◦ aircraft registration fees◦ property taxes from private hangars on public airports

Provides operating, maintenance, and construction grants to 135 public airports

State funding is by direct appropriation

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Funds in the TAF are statutorily appropriated to the Metropolitan Council and Commissioner of Transportation, to be used “solely for transit purposes.”

The Transit Assistance Fund (TAF) receives a portion of MVST (40% in FY 2012 and thereafter):◦ 36% to metropolitan transit assistance account (90% of 40%)◦ 4% to greater Minnesota transit assistance account (10% of

40%)

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A portion of motor vehicle lease sales tax (MVLST) is statutorily dedicated to greater MN transit, after offsets to the General Fund

MVLST Revenue:◦ $5.2 million in FY 2011 (first year this money was

received), ◦ Projected to receive $5.8 million in FY 2012, increasing to

$9.0 million in FY 2015

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Provides operating and capital grants to local units of government for transit services in Greater MN

Operates large parking ramp for car poolers in Minneapolis where parking fees offset construction, maintenance, and operating costs

Feds provided 46% of total funding in FY 2011

At $15M in both FYs 2012 and 2013, Transit has the largest general fund budget in MnDOT

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FY 2012 and 2013 direct appropriations

◦ Trunk Highway Fund: $4.897 million per year

◦ General Fund: $0.257 million per year

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FY 2012 and 2013 direct appropriations

◦General Fund: $0.500 million per year◦Appropriation started in FY10 and FY11

Federal Funds:

◦$1.6M in FY 2012◦$0.5M in FY 2013

$26M in GO Bonds appropriated in 2009.

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Contact Information

Tracy HatchChief Financial Officer

651-366-4811Tracy.Hatch@state.mn.us

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