Senate Counsel, Research
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H.F. No. 946 - Transportation Finance Conference Committee

Report

Authors: Senator Steve Murphy

Representative Bernard Lieder

Prepared by: Bonnie Berezovsky, Senate Counsel (651/296-9191)

Krista Boyd, Fiscal Analyst (651/296-7681)

Date: May 11, 2007


Article 1

Transportation Appropriations

Section 1 lists the summary of all appropriations by fund. Total direct appropriations to the Department of Transportation, Metropolitan Council transit, and administration and transportation-related activities of the Department of Public Safety for the 2008-09 biennium are $4.180 billion.

Section 2 states that all appropriations in this article are from the trunk highway fund unless another fund is specified. All appropriations for FY2007 are effective the day following final enactment.

Section 3. Department of Transportation.

Subdivision 1. Total MnDOT Appropriations. Contains the total appropriations to the Department of Transportation by fund.

Subdivision 2. Multimodal Systems.

(a) Airport Development and Assistance. Appropriates $20.298 million in FY08 and $20.298 million in FY09 for airport development and assistance. Of this appropriation, $6 million each year is onetime funding and $200,000 is for administrative expenses of the Airport Funding Advisory Task Force.

(b) Aviation Support Services. Appropriates $6.036 million in FY08 and $6.152 million in FY09 for aviation support services. $65,000 each year is for the Civil Air Patrol.

(c) Transit. Appropriates $19.553 million in FY08 and $19.577 million in FY09 for Greater Minnesota transit.

(d) Freight. Appropriates $5.385 million in FY08 and $5.525 million in FY09 for freight purposes.

(e) Rail. Appropriates $250,000 as a onetime appropriation in FY08, as a grant to the Northstar Corridor Development Authority for the extension between Big Lake and Rice.

Subdivision 3. State Roads.

(a) Infrastructure Operations and Maintenance. Appropriates $236.083 million in

FY08 and $247.262 million in FY09 for infrastructure operations and maintenance.

(b) Infrastructure Investment Support. $184.679 million in FY08 and $194.728 million in FY09 is for infrastructure investment support. Of this appropriation, up to $1.0 million is for the Urban Partnership program, and $5 million is for a mileage tax pilot project.

(c) State Road Construction. $504.082 million in FY08 and $677.563 million in FY09 is for state road construction and $193.5 million in FY08 and $350.4 million in FY09 of this amount is from federal highway aid. Requires the commissioner to notify the chairs of the Senate and House of Representatives transportation budget divisions of significant changes in these estimates. Allows the commissioner to transfer $15 million each year to the trunk highway fund revolving loan account.

(d) Highway Debt Service. $58.718 million in FY08 and $80.527 million in FY09 is for highway debt service.

(e) Electronic Communications. Appropriates $5.161 million in FY08 and $5.288 million in FY09 for electronic communications. Specifies that $9,000 each year is from the general fund to equip and operate the Roosevelt signal tower.

Subdivision 4. Local Roads (state aid systems).

(a) County State Aids. Appropriates $474.098 million in FY08 and $526.895 million in FY09 from the county state aid highway fund for distribution to counties.

(b) Municipal State Aids. Appropriates $127.663 million in FY08 and $141.649 million in FY09 from the municipal state aid street fund for distribution to cities with a population of over 5,000.

(c) Town Road Sign Replacement Program. Appropriates $2.5 million in FY08 from the general fund for the town road sign replacement program, including purchase and installation of new signs.

Subdivision 5. General Support.

(a) Department Support. Appropriates $40.827 million in FY08 and $41.623 million in FY09 for department support.

(b) Buildings. Appropriates $17.382 million in FY08 and $17.445 million in FY09 for building needs. If the appropriation for either year is insufficient, the appropriation for the other year is available.

Subdivision 6. Transfers. Allows the commissioner to transfer unencumbered fund balances among the appropriations from the trunk highway fund and the state airports fund. Specifies that no transfers may be made from the state road construction or debt service appropriations or between funds.

Requires the Commissioner of Finance to transfer $5.950 million in FY08 and $2.820 million in FY09 from the flexible account in the county state aid highway fund to the municipal turnback account, $12.940 million in FY08 and $15.330 million in FY09 to the trunk highway fund and the remainder in each year to the county turnback account.

Directs the Commissioner of Finance to transfer $4.6 million from the trunk highway revolving loan account to the trunk highway fund.

Directs the Commissioner of Finance to transfer $1.221 million from the general fund to the trunk highway fund to reimburse the fund for transfer of land to Mounds View.

Subdivision 7. Use of State Road Construction Appropriations. Specifies that money appropriated for state road construction for any fiscal year before FY08 is available during FY08 and FY09 provided the money is spent on the project for which the money was originally encumbered during the fiscal year for which it was appropriated.

Subdivision 8. Contingent Trunk Highway Appropriations. Allows the commissioner, with approval by the Governor and written approval by the majority of a group consisting of the Legislative Advisory Commission and ranking minority members of the House of Representatives and Senate transportation finance committees, to transfer all or part of the balance in the trunk highway fund to an appropriation: (1) for trunk highway design, construction, or inspection in order to take advantage of an unanticipated receipt of income or federal advance construction funding; (2) for trunk highway maintenance in order to meet an emergency; or (3) to pay tort or environmental claims. Specifies that any transfer as a result of using federal advance construction funding must include an analysis of the effects on the long-term highway fund balance. Does not authorize the commissioner to increase federal advanced construction funding beyond specifically authorized amounts.

Section 4. Metropolitan Council.

Subdivision 1. Total Met Council Appropriation. Contains the total appropriation to the Metropolitan Council from the general fund.

Subdivision 2. Bus Transit. Appropriates $97.214 million in FY08 and $73.453 million in FY09 from the general fund for metropolitan bus transit. Of the first year appropriation, $23.761 million is onetime.

Subdivision 3. Rail Operations. Appropriates $11.539 million in FY08 and $11.637 million in FY09 from the general fund for operations of the Hiawatha light rail transit line. Hennepin County may not contribute toward Hiawatha light rail transit operating costs.

Section 5. Department of Public Safety.

Subdivision 1. Total Public Safety Appropriations. Contains the total appropriations to the Department of Public Safety transportation-related programs by fund.

Subdivision 2. Administration and Related Services.

(a) Office of Communications. Appropriates $412,000 in FY08 and $434,000 in FY09 for the office of communications.

(b) Public Safety Support. Appropriates $7.986 million in FY08 and $8.213 million in FY09 for public safety support. Specifies that $110,000 in FY08 and $28,000 in FY09 is a onetime appropriation for a security coordinator for the 2008 Republican National Convention; $380,000 in each year is for payment of public safety survivor benefits; $1.199 million in FY08 and $1.367 million in FY09 is for the public safety officer's benefit account; and $508,000 each year is for soft body armor reimbursements.

(c) Technical Support Services. Appropriates $3.870 million in each year for technical support services. Of these amounts, $1.416 million each year is for information systems security and disaster recovery.

Subdivision 3. State Patrol.

(a) Patrolling Highways. Appropriates $67.626 million in FY08 and $71.522 million in FY09 for patrolling highways. Of this appropriation, $2.060 million in FY08 and $3.653 in FY09 is for the cost of adding up to 40 state troopers, and $1.137 million in each year is for fuel costs.

(b) Commercial Vehicle Enforcement. Appropriates $6.945 million in FY08 and $7.196 million in FY09 for commercial vehicle enforcement. Of these amounts, $198,000 each year is for fuel costs.

(c) Capitol Security. Appropriates $3.028 million in FY08 and $3.128 million in FY09 from the general fund for capitol security.

Subdivision 4. Driver and Vehicle Services.

(a) Vehicle Services. Appropriates $26.032 million in FY08 and $26.609 million in FY09 for vehicle services. Specifies that the base appropriation from the Highway User Tax Fund is $7.936 million in FY10 and $8.236 million in FY11.

(b) Driver Services. Appropriates $27.940 million in FY08 and $28.712 million in FY09 for driver services. Of these appropriations, $25,000 the first year and $23,000 the second year are for a driver's license and motor vehicle records coordinator.

Subdivision 5. Traffic Safety. Appropriates $435,000 each year from the trunk highway fund for traffic safety. Of these appropriations, $111,000 each year are for federal grants administration.

Subdivision 6. Pipeline Safety. Appropriates $1.315 million in FY08 and $1.354 million in FY09 for pipeline safety.

Section 6. General Contingent Accounts. Appropriates $375,000 in FY08 and $375,000 in FY09 for contingencies related to the trunk highway, highway user and airport funds.

Section 7. Tort Claims. Appropriates $600,000 each year from the trunk highway fund to the Commissioner of Finance for tort claims.

Section 8. Carry-forward of Vehicle Services Operating Account. Carries forward the 2005 vehicle services appropriation and allows up to $1.750 million to be used for automated support systems.

Section 9. Federal Funds Spending Authority. Allows the Commissioner of Transportation to spend up to a total of $5,000,000 in federal transit funds for public transit systems capital assistance. This amount is available for fiscal years 2009 through 2013.

Section 10. Airport Funding Advisory Task Force. Creates the Airport Funding Advisory Task Force to study and recommend the best methods for funding airports and the state airports fund. The task force is composed of three members of the Senate (at least one minority), and three members of the House of Representatives (one appointed by the minority leader). The task force chair may appoint additional members, representing various organizations. The task force must report its recommendations by February 15, 2008.

Article 2

Trunk Highway Bonding

Section 1 provides for an annual debt service surcharge on fuel taxes, calculated annually to recover debt service needs to repay trunk highway bonds. The surcharge maximum 2.5 cents per gallon of gasoline, with proportional increases on other fuels.

Section 2 appropriates $150 million from the bond proceeds account in the trunk highway fund for each of the next ten years. No more than $22.5 million each year may be used for program delivery. Of this amount, in 2008:

At least $50 million is for transit facility improvements.

Section 3 appropriates $150,000 from the bond proceeds fund for bond sale expenses.

Section 4 authorizes the sale of $1.501 billion in trunk highway bonds to support the appropriations in this article.

Article 3

Highway User Taxes

Section 1:

Section 2 accelerates the vehicle depreciation schedule on which annual additional vehicle registration tax is computed, resulting in lower percentages after first year. The section also removes caps on vehicle registration tax of $189 for the first renewal and $99 for subsequent renewals. It provides that an owner of a vehicle on which registration tax has already been paid under current law will not pay a higher tax on that same vehicle.

Section 3 allows vehicles leased or rented for periods not more than 28 days to be registered for less than one year (between four months to one year.) The commissioner or deputy registrar must stamp the expiration month on the certificate of title in red.

Section 4 inserts language conforming with new transit accounts.

Section 5 strikes obsolete language.

Section 6 inserts conforming language.

Section 7 increases the gasoline tax to 25 cents per gallon as of September 1, 2007, and imposes corresponding increases in E85 and M85.

Section 8 imposes corresponding increases in special fuel and excise tax effective September 1, 2007.

Section 9 increases the fee on rentals and short-term leases of vehicles from three to five percent of the sales price.

Section 10 requires motor vehicle lessors to report motor vehicle lease sales taxes separately from other sales taxes, effective July 1, 2009.

Section 11 amends the statute on deposit of revenues, stating that the revenues collected from the sales tax on motor vehicle leasing shall be deposited so that after a three-year phase-in beginning in fiscal year 2010, ending in fiscal year 2012 all revenues are allocated 50 percent to the Highway User Tax Distribution Fund, 37.5 percent to the Metropolitan area transit account, and 12.5 percent to the Greater Minnesota transit account.

Section 12 changes the allocation of revenue from the sales tax on motor vehicles, such that after a five-year phase-in ending in fiscal year 2012 revenues are allocated 60 percent to the Highway User Tax Distribution Fund, and 40 percent to the transit assistance fund. The transit allocation is further allocated, 36 percent to the Metropolitan area transit account, and four percent to the Greater Minnesota transit account.

Section 13 inserts conforming language.

Section 14 repeals the Transit Assistance Program and the associated unused transit assistance fund.

Article 4

County State-Aid Highway Fund Distribution

Section 1 provides that MnDOT administrative costs, disaster account, research account, and

state park road account deductions from county state-aid highway fund are taken only from the apportionment fund.

Section 2 provides that, after deductions, the remainder of the apportionment sum is apportioned according to the current statutory formula.

Section 3 defines the "excess sum" as the amount in the CSAH fund that comes from: 1) new revenue from the gas tax above 20 cents per gallon; 2) new revenue from registration tax above the inflation-adjusted amount collected in fiscal year 2007; and 3) new revenue from motor vehicle sales tax above the percentage collected in fiscal year 2007. The "apportionment sum" is defined as the amount available in the CSAH fund minus the excess sum.

Section 4 establishes the formula for distribution of the excess sum, as follows: 40 percent is based on each county's proportion of motor vehicle registration; and 60 percent is based on each county's proportion of construction needs.

Section 5 instructs the Revisor to renumber a section.

Article 5

Local Option Taxes

Section 1 allows Metropolitan counties to impose wheelage tax at $10/vehicle or at current level of $5/vehicle. After deducting the costs of collection, the Commissioner of Public Safety deposits tax proceeds in each levying county's road and bridge fund, rather than county wheelage tax fund. The section removes the requirement that the county reduce its property tax road and bridge levy by the amount of the wheelage tax collection. Motorcycles and motorized bicycles are exempt.

Sections 2 and 3 make language changes to conform to Section 1.

Section 4, Subdivision 1, defines the terms "metropolitan transportation area" (those participating counties among the seven metropolitan counties and adjacent counties that opt in), eligible county, committee, and population.

Subdivision 2 authorizes county boards acting under a joint powers agreement to impose a transportation sales and use tax of one-half percent, and an excise tax of $20 per vehicle purchased at retail.

Subdivision 3 requires the joint powers, before imposing the tax, to enter into an agreement allowing eligible counties to join and impose the tax. The agreement may provide for withdrawal of a participating county and it may provide for a weighted voting system.

Subdivision 4 specifies membership of the joint powers board to be one or more representatives of each county in the metropolitan transportation area, appointed by the county board. Up to .5 percent of the tax proceeds may be used to reimburse counties for administrative expenses. The joint powers board must establish a grant application process, and it may appoint a technical advisory group of city, county, or public agency representatives. The Commissioner of Revenue must deduct collection costs, then remit remaining tax proceeds to the joint powers board.

Subdivision 5 directs the joint powers board to establish grant-award procedures, define objective criteria for awards, and establish a grant evaluation and ranking system committee consisting of one county commissioner and one city representative from each participating county, and additional city representatives for more populous counties. The joint powers board must allocate at least $18,850,000 in FY09 to the Metropolitan Council for operating assistance for transit.

Subdivision 6 limits grant recipients to state and political subdivisions. Money must be allocated at least 25 percent for trunk highways and local roads of regional significance, at least 50 percent for transitways and park-and-rides, 25 percent for any allowed purposes, with a maximum of five percent for pedestrian/bicycle programs.

Subdivision 7 subjects administration, collection, and enforcement of the tax to sales tax statutory provisions.

Subdivision 8 requires the joint powers board to report by February 1 each year to the legislative transportation committees.

Subdivision 9 states that any grant to the Metropolitan Council is not in lieu of state support.

Section 5 authorizes counties outside the metropolitan transportation area, either singly or with other contiguous counties acting as a joint powers board, to impose the half-cent sales tax for regional transportation if approved by the voters at a general election. The taxes must be for a designated improvement, and terminate when the improvement is completed.

Article 6

Department of Public Safety Service Fees

Section 1 increases fees for license plates and validation stickers, by $0.75 per plate or sticker. Increased revenues are deposited with the existing fee, in the vehicle services account.

Section 2 increases fees for vehicle titles and duplicate titles, by $0.75 per transaction. Increased revenues are deposited with the existing fee, in the vehicle services account.

Section 3 increases the fees for motorized bicycle operator's permits by $0.75.

Section 4 increases fees for Minnesota driver's licenses and identification cards by $0.75, deposited in the driver services account.

Section 5 provides that the fee charged for senior identification cards be rounded down to the nearest quarter dollar.

Section 6 increases the fee by $0.75 for a driver's license which indicates that the holder has a standby or temporary custodian.

Section 7 amends the statute on driver's license reinstatement fees, requiring a $20 reinstatement fee for drivers whose license has been suspended for theft of gasoline.

Section 8 specifies fees charged for State Patrol escort services:

Article 7

Other Transportation Activities

Section 1 redistributes five percent of the highway user fund that the Legislature can redistribute no more frequently than every six years. The new formula leaves town roads and town bridges as they are in the current distribution. Money in the flexible account may be used for turnbacks, highway safety improvements, and routes of regional significance. This section is effective in 2009.

Section 2 allows a person whose license has been revoked for DWI offenses, and who is certified eligible for a public defender, to pay half the total surcharge ($430) plus $25 and reinstatement fee ($250) to obtain a two-year driver's license. Upon payment of the remainder, another two-year license is issued, and after that the driver is back on the regular four-year schedule. If before the full surcharge and fee are paid, the person's license expires or is canceled, revoked, or suspended, the full amount outstanding on the previous offense becomes due and the new surcharge and reinstatement fee may be paid in installments. The entire $50 share of the surcharge for the traumatic brain injury account is paid out of the first installment. This section is effective July 1, 2008.

Section 3 changes current language that requires the Commissioner of Transportation to forecast highway user fund and trunk highway fund revenues and expenditures and, two weeks before release of the forecast, review forecast information with the legislative finance and transportation chairs and fiscal staff. New language provides that the review with legislative chairs and staff must take place no later than one week following release of the forecast.

Section 4 limits a county regional railroad authority's contribution to a transit project's capital costs to ten percent, and prohibits an authority from contribution to costs of transit operation and maintenance. The authority must discontinue, by January 1, 2008, subsidizing any transit operating costs that are currently being paid by the authority.

Section 5 establishes the formula for funding for the replacement transit service (opt-out transit systems), which includes a percentage of the motor vehicle sales tax.

BB/KB:rer




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