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Transportation funding

Transportation funding in this state flows from a variety of sources, with most state-level dollars coming from Minnesota’s gas tax, vehicle registration fees, and the motor vehicle sales tax. Property taxes generate much of the revenues for local spending on roads. Sources also include federal aid, transit fares, and spending by companies on such important private-sector transportation infrastructure components as rail lines and port facilities. Federal transportation dollars – generally provided as a match to state and local spending – often cover most of the costs for transportation infrastructure projects in the state.

Minnesota’s governments also sell bonds and in this way borrow money for spending on transportation infrastructure. Bonding, then, is a financing mechanism, not a revenue stream. Bonds raise dollars to advance transportation infrastructure projects on a faster timeline than would be possible with a pay-as-you-go strategy. But to the extent that the state government depends upon future transportation revenues to pay off bonds sold now, great care must be taken to ensure that the commitment of those future revenues will not leave the state short of dollars needed to address transportation upkeep and operations in the years ahead. Additional revenue – from revenues for the highway fund or from the state’s general fund dollars – would increase the capacity for bonding for transportation projects.

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