1. Introduction to MnDOT Finances Transportation Finance Advisory Committee May 18, 2012 1

2. 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 2

3. 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: Ports Passenger Rail Greater Minnesota Transit 3

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

6. 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 bonds 6

7. 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 Tax48% Registration Tax33% 60% Motor Vehicle Sales Tax (MVST)19% Other Sources 0% 7

8. The HUTD Fund is distributed as follows: 95% Distribution: 62% to the Trunk Highway Fund 29% to the County State-Aid Highway Fund 9% to the Municipal State-Aid Street Fund 5% Distribution (5% Set Aside): 30.5% to town roads 16% to town bridges 53.5% to flexible highway account (turnbacks, etc.) 8

9. 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% Distribution 5% Set Aside Gas Tax $846M Gas Tax $846M Tab Fees $557M Tab Fees $557M Motor Vehicle Sales Tax $276M Motor Vehicle Sales Tax $276M Other $4M Other $4M DNR Article XIV of the Minnesota Constitution

10. 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 10

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12. 12 Cents per Gallon FederalMNWISDIAND Gasoline18.428.030.922.021.023.0 Diesel24.428.030.922.022.523.0 Gasohol (10% blend) 18.428.030.920.019.023.0

13. 13 Gasoline Excise Tax Total State State + Federal Minnesota28.028.146.5 US Average20.931.149.5 Rank 8 th highest (out of 51) 19 th highest (out of 51) 19 th highest (out of 51)

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16. 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 16

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18. 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 million 18

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22. 22 Federal $525.5 HUTD Distribution $970.7 TRUNK HIGHWAY $1,556.5 Other $60.3 Trunk Highway Bonds $267.1

23. 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 23

24. 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 24

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27. 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 27

28. 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 states Federal Fund 28

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30. 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 Administration 30

31. Debt Service Cash Balance Fund Balance Advanced Construction 31

32. 32 HUTD Distributions $536.4 Motor Vehicle Lease Sales Tax $5.2 COUNTY STATE-AID HIGHWAY FUND $544.4 Other $2.8 HUTD Distributions $140.9 MUNICIPAL STATE-AID STREET FUND $151.9 Other $1.1

33. 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 registrations 60% based on construction needs 33

34. 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 states 87 counties through a statutory formula as follows: 10% equally to each county 10% based on each countys proportional share of vehicle registrations 30% based on each countys proportional share of CSAH lane-miles 50% based on each countys share of 25-year construction needs 34

35. 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 citys population 50% based on each citys 25-year construction needs 35

36. Aeronautics Transit Freight & Commercial Vehicles Passenger Rail 36

37. 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 37

38. 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%) 38

39. 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 39

40. 40 General Fund $11.7 Transit Assistance Fund $26.7 MnDOT Transit Expenditures $71.4 Federal Revenue Greater MN $32.7 Other $0.3

41. 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 41

42. FY 2012 and 2013 direct appropriations Trunk Highway Fund: $4.897 million per year General Fund: $0.257 million per year 42

43. 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. 43

44. Contact Information Tracy Hatch Chief Financial Officer 651-366-4811 Tracy.Hatch@state.mn.us Tracy.Hatch@state.mn.us 44