Transportation Finance Advisory Committee Issues Final Report

The committee identified 13 revenue-generating options for state highways, transit, and local roads.
(Published Jan 7, 2013)

The Transportation Finance Advisory Committee (TFAC), a group established by Gov. Dayton to make recommendations pertaining to the state’s transportation infrastructure, met throughout 2012 and released its final report on Dec. 27.

The League, along with other city and county representatives, successfully advocated that local road needs and funding options be included in the report.

Transportation stakeholders have closely watched the TFAC’s work in large part because it will inform and influence Gov. Dayton’s transportation agenda. Given that the election yielded DFL majorities in the House and Senate, it is logical to expect that the 2013 Legislature will be working collaboratively with the governor to advance a transportation package, among other things.

To the surprise of some, the TFAC stopped short of making funding recommendations. The group instead provided a thorough analysis of transportation infrastructure needs and laid out a menu of funding options, many of which have been enacted or considered over previous decades. Minnesota Department of Transportation (MnDOT) officials staffing the TFAC appeared hesitant to include hard recommendations in the final report given that the report was ordered—but not necessarily approved—by the governor.

Below are the 13 funding options identified by the TFAC in the order they appear in the report:

  1. Increase the motor vehicle registration fees to raise revenue by 10 percent through an adjustment in the multiplier, which will generate $1.1 billion in new revenue during the next 20 years for the Highway Users Tax Distribution Fund.
  2. Increase per-gallon the excise tax rate on motor fuels to generate $15.2 billion in new revenue during the next 20 years for the Highway Users Tax Distribution Fund. This option can be achieved in multiple ways, including a phase-in option.
  3. Add $0.005 to the existing $0.0025 sales tax for transit in the Twin Cities metropolitan area (five counties), which is estimated to generate $200 million annually.
  4. Capture the remaining leased vehicle sales tax from the state general fund (estimated at $32 million annually) for transportation.
  5. Increase by $32 million annually the allocation to Greater Minnesota Transit to address service required by statute (71 percent of revenue gap for Greater Minnesota Transit over 20 years is $640 million).
  6. Expand the option of wheelage tax for 80 counties in Greater Minnesota, including raising the cap limit for all 87 counties.
  7. Enable the local option for the formation of transportation improvement districts.
  8. Enable local option sales taxes for transportation in 80 counties without the need of a referendum.
  9. Expand regional transit capital levy (also known as transit taxing district) in entire seven-county Twin Cities metropolitan area and use funds for capital and operating needs. (Governance issues need to be considered.)
  10. Expand MnPASS System (which includes the concept of dynamic pricing) and dedicate revenue to multi-modal enhancements on managed lanes.
  11. Employ Value Capture concepts around transportation improvements.
  12. For projects, explore the following options: Tolling options targeted for new capacity; public-private partnership opportunities for enhancements and financial leveraging of transportation projects; and monetizing assets to generate revenue.
  13. Continue state role in bonding for local roads and bridges, transit, ports, passenger rail, freight rail, and safe routes to school.

About the TFAC
The TFAC is a 19-member panel composed of legislators, agency heads, business and investment community representatives, an economist, a union representative, and representatives from city and county government.

The TFAC was established in early 2012 and has been facilitated by MnDOT staff. Gov. Dayton directed the committee to analyze potential revenue sources and nontraditional approaches to transportation funding and financing as well as opportunities for public/private partnerships to invest in transportation improvements.

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