Metro CitiesTransportation Policy CommitteeAugust 10, 2015

Overview of Minnesota Highway and Transit Finance

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• MN and Metro Area transportation revenues and expenditures

• Highway revenues and expenditures

• Transit revenues and expenditures

Today’s topics

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• Minnesota’s constitutional dedication of the gas tax, vehicle registration tax and the motor vehicle sales tax to specific transportation purposes, combined with federal modal-based funding programs, has led to a very segmented system of funding between highways and transit (i.e. highway funds are for highways and transit funds are for transit)

General Concept

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2014 Minnesota Transportation Revenues$5.3 billion

Local Property Taxes and Fees

34%

Fares & Other Transit3%

Federal Transit4%

General Fund & State Bonds

3%

CTIB Sales Tax2%

Transit MVST5%

Highway MVST7%

Vehicle Registration Tax12%

Gas Tax16%

Federal Highway13% Other Misc. Highway

1%

Highway User Fund

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2014 Minnesota Transportation Spending$5.3 billion

City Roads & Transportation24%

County Roads & Transportation

22%

Townships7%

MnDOT Debt Service3%

MnDOTConstruction15%

MnDOT Operations & Other Highway

11%

Public Safety & Other Transfers

2%

Gr MN Transit & Rail Of-fice2%

Metro Area Transit Capi-tal4%

Metro Area Transit Operations

10%

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2014 Metro Area Transportation Revenues$2.4 billion

Local Property Taxes and Fees

38%

Fares & Other5%

Federal Transit8%

General Fund & State Bonds

4%

CTIB Sales tax 5%

Metro Area Transit MVST9%

Federal Highway9%

Highway User Taxes22%

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2014 Metro Area Transportation Spending$2.4 billion

City Roads33%

County Roads 15%

MnDOT Construction15%

MnDOT Operations & Other Highway

6%

Metro Area Transit Capital 9% Metro Area Transit Operations

22%

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State highway revenues

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• $878 M in FY14 or $30.8 M/penny

• Current rate is 28.5 cents per gallon

• Includes base 25 cents per gallon and annual adjustment for debt service on bonds

• Per penny revenue declining over recent years, from high of $32.6 M/penny in early 2000s

• Revenue constitutionally dedicated only to highway purposes

Motor fuel tax (Gas tax)

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• $652 M in FY 14

• Passenger vehicles pay based on age and depreciated value of vehicle

• Vehicles 11 years and older pay flat $35 tax

• 35% - 40% of vehicles pay minimum rate

• Constitutionally dedicated to highway purposes

Vehicle registration tax (tab fees)

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• Constitutionally dedicated to highways and transit in 2007; phased-in over 5 years

• 60% dedicated to highways, 40% to transit

• FY14 $384M to highways; $256M to transit

• 1993-2002 average growth of 10% per year; 2002-2009 decreased 4% per year; 2009-2014 growth rebounded to over 7% per year

Motor Vehicle Sales Tax (MVST)

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FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

$350

$450

$550

$650

$750

$850

614 606594

557538 532

513

442453

505

559

598

640

699

740

788

834

853

State MVST Total - Actual and February 2015 Forecast Compared to Prior State Forecasts

Prior Forecasts

Actual

Feb 15Forecast

In $Millions

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• Receives constitutionally dedicated state funds for highway purposes (gas tax, registration tax, MVST)

• Used only for highway purposes

Highway User Tax Distribution Fund (HUTDF)

HUTDF

FY14 $1.92 Billion

Motor Fuel Tax$ 878 M

Registration Tax$ 652 M

60% of Motor VehicleSales Tax

$ 384 M

Other Income$ 3 M

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• Constitution requires revenues to be distributed:– 5% legislatively determined to highways – 95% remainder allocated 62% to state highways, 29% county

highways, 9% municipal streets

Highway User Tax Distribution Fund

HUTDF

FY14 $1.92 Billion

Trunk Highway Fund58.9%

County StateAid Highways

27.55%

Municipal StateAid Streets

8.55%

Town Roads, Bridges & Flexible

Fund 5.0%

Collection CostsDNR & Other

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• 30,400 mile CSAH system

• FY14 revenues $531 M

• All 87 counties participate, distribution formula:

County State-Aid Highways (CSAH)

50% Needs

30% Lane-miles 10% Equally

10% VehicleRegistrations

40% Vehicle Registrations

60% Needs

68% of CSAH Funds 32% of CSAH Funds

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• Only cities ≥ 5,000 population receive municipal state-aid

• 2,800 mile MSA system

• FY14 revenues $162 M, distribution formula:

Municipal state-aid streets (MSA)

50% Population

50% Needs

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• 11,933 mile TH system owned by MnDOT (constitutionally limited to 12,200 miles)

• Total FY14 THF expenditures: $1.6 Billion (includes federal revenues)

• Appropriated 95% to MnDOT and 5% to State Patrol

• $1.5 Billion MnDOT share in 2014 went:– $800M (52%) to road construction related activities– $580M (39%) operations, maintenance, other highway spending– $136M (9%) debt service

State Trunk Highway Fund (THF)

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MnDOT Debt Management Policy

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Statewide Construction Outlook

Transit Revenuesand Expenditures

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• 73 of 80 counties have some form of transit service– 6 urbanized systems (Duluth, St. Cloud, etc.)– 11 small urban systems– 36 rural county/multi-county systems– 4 systems for elderly and disabled

• Total ridership: 12 million riders (2014)

• Total FY14 budget: $68.2 M

Greater Minnesota transit systems

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Greater MN transit2014 Operating BudgetRevenues

$68.2 MExpenses$68.2 M

Federal22%

State General Fund21%MVST

40%

Fares / Local17%

Urban Regular Route39%

Rural Sys-tems50%

Elderly / Disabled

7%

Small Urban

4%

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Metropolitan CouncilBus Regular Route

METRO Blue Line and METRO Green Line LRT

METRO Red Line BRT

Northstar Commuter Rail

Metro Mobility

Contracted Bus Regular Route

Transit Link Dial-a-Ride

Metro Vanpool

Suburban Transit Providers (Opt Outs)Bus Regular Route and dial-a-ride

Regional Transit Services

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2014 Regional Transit Ridership

Express9%

Urban Local63%

Commuter Rail1%

Light Rail16%

Met Mo/ Dial-a-Ride

2%

Suburb Local

6%U of M

3%

Bus system accounts for 83%of regional ridership

97.5 million rides CY14

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Transit Operating Funding Sources

• Motor Vehicle Sales Tax (MVST)– Metropolitan area transit receives 36% of statewide MVST

• State General Fund– Legislatively appropriated for Metro Mobility and LRT operations

• Federal Funds– Formula capital funds, can be used for preventive maintenance in

operating budget

• Fares– Passenger fares from all services

• Local and Other– CTIB transitway operating funds– Advertising and other revenue

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CY 2015 Metropolitan Transit Operating Budget

MVST262.246%

State$76.813%

Federal$28.25%

Fares 108.419%

Reserves19.93%

Other3.31%

CTIB/Local31.96%

Property Tax

$45.08%

Metro Transit

Bus319.856%

Green Line35.36%

Blue Line32.16%

Northstar17.63%

Metro Mobility

62.211% Transp. Planning

61%

TransitLink$6.71%

Fixed Route19.93%

Pass Through31.86%

Debt Service

44.38%

Expenses$575.7M

Revenue$575.7M

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• State bonds

• Regional Transit Capital

• Federal Funds

• CTIB Sales Tax

• Regional Rail Authorities/Other Local

Transit Capital Funding Sources

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• Source of capital funds for basic transit system

• Legislature authorizes the sale of bonds

• Debt service paid with property taxes levied by Council

• Levy paid by Transit Capital Levy Communities

Regional Transit Capital

Questions?

Amy VennewitzMTS Planning & Finance

651-602-1058