Article 1 – Trunk Highway Bonding

Section 1 authorizes the sale of $1.001 billion in trunk highway bonds.

Section 2 appropriates $1 billion from the trunk highway bond fund to the Commissioner of Transportation, and $1 million to the Commissioner of Management and Budget.

Section 3 provides that, of the total appropriation, $800 million is for corridors of commerce, to be available over four years from FY2016-FY2019.

Section 4 provides that, of the total appropriation, $200 million is for the transportation economic development program, to be available over four years from FY2016-FY2019.

Section 5 provides that the $1 million appropriation to the Commissioner of Management and Budget is for bond sale expenses.

Section 6 makes this article effective July 1, 2015.

Article 2 – Gross Receipts Tax

Section 1 authorizes the Commissioner of Revenue to cancel or decline to renew a petroleum dealer’s license for failure to file a gross receipts tax return for at least one year.

Section 2 establishes the motor fuels gross receipts tax.

Subdivision 1 imposes a tax on the wholesale business of selling the means or substance used for propelling vehicles on the highways of this state.  The rate is 6.5 percent of a distributor’s gross receipts from the first sale at wholesale of gasoline and special fuels.

Subdivision 2 exempts certain entities from payment of the tax by incorporating existing statutory exemptions from the motor fuels and special fuels tax.

Subdivision 3 provides for conversion of the tax rate to cost per gallon, which is the greater of 6.5 percent of $2.50 per gallon, or 6.5 percent of the previous year’s average wholesale gasoline price per gallon in Minnesota.  The total of the applicable rate, which remains in effect from October 1 to September 30, together with the gasoline tax must be published on the department’s Web site.

Subdivision 4 applies Minnesota Statutes, chapter 289A to the administration of this tax.

Subdivision 5 directs the commissioner to deposit the revenues into the highway user tax distribution fund.

The section is effective October 1, 2015, and applies to gross receipts derived on or after that day.

Sections 3 to 5 insert references to the gross receipts tax into current law dealing with the gasoline tax, relating to tax collection, other taxes, and refund or credit of tax paid.

Section 6 instructs the Revisor of Statutes to rename Chapter 296A “Tax on Petroleum and Other Fuels; Gross Receipts Tax.”

Article 3 – Vehicle Registration Tax

Section 1 increases the vehicle registration tax due on passenger automobiles from $10 to $20, effective July 1, 2018.  It increases the additional tax from 1.25 percent to 1.5 percent of base value, subject to the depreciation schedule which is unchanged.  The section eliminates the provision that caps a registration amount at the smallest amount previously paid on the same vehicle that was registered in Minnesota.  This section is effective the day following final enactment and applies to registration periods beginning on or after September 1, 2015.

Article 4 – Metropolitan Transit Improvement Area Sales Tax

Sections 1 to 4 amend provisions of the statute that imposes the existing ¼-cent sales tax for transit in the metropolitan area.

Section 1 eliminates two definitions—one defines “committee” as the GEARS Committee, and one defines “population.”

Section 2 removes a reference to the GEARS Committee in the joint powers subdivision.

Section 3 removes provisions relating to GEARS and establishing its membership.  The subdivision also eliminates obsolete language.

Section 4 modifies the uses to which the ¼-cent sales tax proceeds may be put by the Counties Transit Improvement Board.  Expenditures on capital improvements to transitways are not capped for Robert Street transitways and Riverview corridor; reference to payment of costs of highway bus rapid transit is included; and county transit project grants (paid for with up to 8.5 percent of the proceeds of the new tax imposed in section 5) are made available to counties that impose the tax under this section.

Section 5 establishes the metropolitan transit improvement area sales tax.

Subdivision 1 defines terms, including the “metropolitan transit improvement area” as including the five counties of Anoka, Dakota, Hennepin, Ramsey, and Washington.

Subdivision 2 imposes the metropolitan transit improvement area transit sales tax at a rate of three-quarters of one percent on retail sales and uses within the five-county area.

Subdivision 3 provides for administration, collection, and enforcement of the tax, as the general sales tax is administered.

Subdivision 4 allocates the revenues as follows:  costs of collection to the Commissioner of Revenue, 8.5 percent of the net proceeds to the Counties Transit Improvement Board, and the remainder to the Metropolitan Council.

Subdivision 5 directs the Metropolitan Council to utilize the proceeds of the tax as provided in this section, funding only projects that are consistent with the Council’s long-range transportation policy plan and located within the five-county area.

Subdivision 6 states priorities for the Council’s use of the money to be payment of:

• debt service;
• proportional distribution to the five counties of 1/8 of the tax proceeds (including the ¼ cent collected under current law) to be used by each county for roads with a transit nexus or for transit projects, except for Hennepin County, which is limited to transit projects;
• costs otherwise authorized in subdivision 7.

Subdivision 7 identifies permissible uses by the Council for the sales tax proceeds, after deduction of collection costs and the 8.5 percent for CTIB, including:

• operating and capital costs to preserve and operate the existing bus/transitway system;
• grants for regional bicycle, trail and pedestrian infrastructure, safe routes to school infrastructure, and active transportation programs (utilizing ten percent of sales tax revenues from entire one cent tax for this purpose);
• expansion of bus system (four percent average annual service increase, including suburban transit), transitways, streetcars, and arterial bus rapid transit;
• maintenance of affordable transit fares;
• transit shelter construction and improvement;
• grant to Center for Transportation Studies ($500,000 annually); and
• other costs consistent with the purposes of the section.

This section is effective for sales and purchases made after September 30, 2015, and applies in the five counties of Anoka, Dakota, Hennepin, Ramsey, and Washington.

Section 6 repeals Minnesota Statutes, section 473.4051, subdivision 2, which requires the state to pay 50 percent of operating costs of light rail transit that are not paid by the federal government.

 Article 5 – Other Taxes, Fees, and Transfers

Section 1 imposes a surcharge (unspecified amount) on an existing $10 fee on vehicle registration and title transfers that is dedicated to the environmental fund.  The surcharge is to be divided equally between the small city and larger city street and bridge accounts.

Section 2 redistributes five percent of the highway user tax distribution fund, as allowed by the Constitution no more frequently than every six years.  The fund proceeds are to be apportioned to the county state-aid highway fund for the town road account (30.5 percent), the town bridge account (16 percent), and the county municipal accounts (ten percent).  The remaining 43.5 percent is directed to the municipal state-aid street fund.  The section is effective July 1, 2015.

Section 3 creates the county turnback account for money to be used for the restoration of trunk highways that revert to the county system.

Section 4 requires the Commissioner of Transportation, in the biennial budget submission to the Legislature, to include a request for an appropriation to the county turnback account.

Section 5 creates the municipal turnback account for money to be used for the restoration of trunk highways that revert to the city system.  The Commissioner of Transportation, in the biennial budget submission to the Legislature, must include a request for an appropriation to the municipal turnback account.

Section 6 amends the statute that provides formula for distribution of the county state-aid highway fund so that the apportionment fund is 68 percent, and the excess sum is 32 percent of the amount to be distributed.  This section is effective October 1, 2015.

Section 7 changes to the section of law relating to deputy registrar fees, in order to conform to the changes in section 8.

Section 8 adds a $10 surcharge on the current $6 vehicle registration renewal filing fee.  The surcharge is to be divided equally between the small city and larger city street and bridge accounts.  The section also dedicates $3.50 of the current $10 filing fee on other vehicle transactions to the city street accounts, instead of to the general fund as under current law.

Section 9 directs the proceeds of the $3 vehicle transfer fee to be divided equally between the small city and larger city street and bridge accounts instead of the general fund as under current law.

Section 10 creates two new special revenue accounts in the state treasury.

Subdivision 1 creates the small city streets and bridges account.  Money in the account must be appropriated by law and shall be distributed proportionally according to city population, among all cities that do not receive, and are not eligible to receive, municipal state aid.  Allocations from this account must be used for construction, improvement and maintenance of city streets and bridges.

Subdivision 2 creates the larger city streets and bridges account.  Money in the account must be appropriated by law and shall be distributed among all cities eligible to receive municipal state aid, according to the same statutory distribution formula that governs distribution of the municipal state-aid street fund.

Section 11 amends the distribution of revenue from the sales tax on motor vehicle leases.  It eliminates the general fund dedication of $32 million of sales tax revenues, and eliminates the transfer of fifty percent of the remaining revenues to greater Minnesota transit. The result is a transfer of the total estimated leasing sales tax revenues to the county state-aid highway fund, to be distributed to all seven metropolitan counties proportionally according to population, except that the share for Hennepin County is based on 25 percent of its population, and the share for Ramsey County is based on 50 percent of its population.  The leasing sales tax revenues transferred to the CSAH fund do not include the revenues generated by the constitutionally required 0.375 percent general sales tax rate.  This section is effective January 1, 2017, except for the provision concerning the constitutionally required .375 percent, which is effective immediately on enactment.

Section 12 changes the distribution of motor vehicle sales tax proceeds so that 58 percent (instead of the current 60 percent) is deposited in the highway user tax distribution fund; 34 percent (instead of the current 36 percent) is deposited in the metropolitan area transit account; and eight percent (instead of the current four percent) is deposited in the greater Minnesota transit account.

Section 13 appropriates an unspecified amount from the general fund to the Commissioner of Transportation for greater Minnesota transit operations in fiscal years 2016 and 2017.

Section 14 repeals the section that creates the flexible highway account, and governs the use of the county turnback account, the municipal turnback account, the highway safety improvement account, and the routes of regional significance account in the state treasury.

Article 6 – Railroad Recodification

This article recodifies and amends current statutes concerning railroad taxes.  Except for section 25, all provisions are effective for assessment year 2016 and thereafter.

Section 1 updates statutory references.

Section 2 changes terms in the definition of “railroad company.”

Section 3 changes the definition of “operating property” to eliminate “franchises, rights-of-way, bridges, trestles, shops, docks, wharves, buildings, and structures” and to add “roads, locomotives, freight cars, and improvements on leased property”.  Operating property is assessed by the Commissioner of Revenue where the property is located.

Section 4 makes technical changes and provides that nonoperating property is assessed by the local or county assessor.

Sections 5 to 12 define terms.  Most of the definitions are taken from Minnesota Rules.  Section 5 defines “company” to include all types of legal entities.

Section 6 defines “unit value” to refer to the going concern value of the entire integrated system of a railroad company, without regard to the value of its component parts.

Section 7 defines “book depreciation” as accumulated depreciation on a railroad company’s books or allowed by the Surface Transportation Board.

Section 8 defines “equalization” to mean adjustment of estimated value of railroad operating property to the sales ratio of commercial and industrial property.

Section 9 defines “exempt property” which is nontaxable for ad valorem tax purposes, including exempt personal property.

Section 10 defines “original cost” to refer to the amount paid for an asset according to the railroad’s books or as allowed by the Surface Transportation Board.

Section 11 defines “system” as the entire property of a railroad, used in its operations.

Section 12 defines “Minnesota allocated value” to mean the value of the railroad company’s operating property assigned to Minnesota for tax purposes.

Section 13 updates statutory cross-references.

Section 14 specifies procedure for appeal by assessors to the Tax Court of a determination as to whether railroad property is operating or nonoperating.

Section 15 identifies the railroad property that is excluded from Minnesota allocated value, to include nonoperating property or exempt property.

Section 16 provides for the nature of the annual report that must be submitted by the railroad company concerning property.  The section provides consequences for failure to file reports.

Section 17 updates terms concerning the powers of the commissioner.

Section 18 relates to the commissioner’s power to appoint people to examine books and records of a railroad company and to issue subpoenas.

Section 19 specifies the standards and approaches for valuing railroad property.  The section allows the commissioner to use the cost approach, the income approach, or the market approach.

Section 20 provides the method of apportioning value of operating property to operating parcels in Minnesota, and allocating value to Minnesota.

Section 21 updates provisions concerning the commissioner’s certification of value to the county assessors.

Section 22 makes technical changes.

Section 23 increases the state general levy against commercial-industrial property and seasonal residential recreational property from the current level of $592,000,000 to $889,600,000 for taxes payable in 2016.

Section 24 adjusts the levy apportionment between commercial-industrial tax capacity (increased to 95.1 percent) and seasonal residential recreational property (4.9 percent).

Section 25 appropriates money from the general fund to the Commissioner of Revenue to implement this article.  This section is effective the day following final enactment.

Section 26 instructs the revisor as to section number changes.

Section 27 repeals statutory sections and Rules that are superseded by the sections in this article.

Article 7 – Efficiency Measures

Section 1 requires that the proceeds from the sale or licensing of software developed by the Department of Transportation using trunk highway funds must be deposited into the trunk highway fund.  Under current law, these proceeds are deposited into the MN.IT services revolving fund.

Section 2 allows the Commissioner of Transportation, with the approval of the Commissioner of Management and Budget, to transfer unencumbered fund balances among appropriations within the trunk highway fund and the state airports fund, except that no transfers are allowed from the appropriations for state road construction, state road operations and maintenance, or debt service.  Transfers made under this section must be reported immediately to the Legislature.  This section is effective the day after final enactment.

Section 3 creates a state right-of-way acquisition loan account in the trunk highway fund to provide interest-free loans to local governments to acquire property within the right-of-way of an existing or proposed state trunk highway and to assist an acquiring authority to acquire homestead property in the right-of-way and provide relocation assistance, with the consent of the owner of the affected property.  This section is effective January 1, 2016.

Section 4 expands an existing statutory appropriation to the Department of Transportation to cover the state’s obligations and expenses related to acquisition and disposal of property.  The existing appropriation covers only state leased property, but this section covers all types of interests in property.

Section 5 removes the requirement that the Department of Transportation pay for the relocation of utilities located in highway right-of-way, when the relocation is necessary due to a trunk highway construction project.  This section is only applicable to those utilities installed after August 1, 2015.

Section 6 specifies that the revenue attributable to the penalty surcharge for late payment of vehicle registration tax, created in section 7 of this article, shall be considered part of the net proceeds of the vehicle registration tax, and deposited in the highway user tax distribution fund.  This section is effective July 1, 2015.

Section 7 creates a penalty surcharge for late payment of vehicle registration taxes.  The surcharge shall be $25 for each month or portion of a month following the registration period expiration date, except that the total late fee may not exceed $100. This section is effective July 1, 2015.

Section 8 directs the commissioner to establish a program to allow flexibility in allocating federal funds for state-aid projects so the money can be redirected to the project for which the money can be used most efficiently.  This section is effective the day following final enactment.

Section 9 amends the fees that are charged for escort services by the State Patrol, by removing specified statutory rates and allowing the commissioner of public safety, by July 1 of each year, to set the annual rates necessary to recover the actual costs of providing the service.  Fees for State Patrol flight services are unchanged.  This section is effective the day following final enactment.

Section 10 removes aircraft acquisition costs from the charges for air transportation services provided by the commissioner that must be charged to users of these services.

Section 11 adds purchase of property for transit-related capital improvements to the type of loans eligible through the right-of-way acquisition loan fund (RALF) administered by the Metropolitan Council.  The section eliminates obsolete language.  It is effective the day following final enactment.

Section 12 requires the Commissioner of Transportation to identify in the Report on Major Highway Projects the status of the efficiency recommendations that were made by the 2009 Transportation Strategic Management and Operations Advisory Task Force, and to include in the report plans to incorporate greater efficiencies in department operations.

Section 13 appropriates an unspecified sum from the trunk highway fund to the Commissioner of Transportation for deposit in the state right-of-way acquisition loan account.  This section is effective January 1, 2016.

Article 8 – Transportation Policy

Section 1 amends the corridors of commerce program to include “main street improvement” to the categories of eligible types of projects.

Section 2 makes projects within a city eligible for corridors of commerce funding.

Section 3 clarifies criteria for project selection within the corridors of commerce program.

Section 4 requires the Commissioner of Transportation, to the greatest extent feasible, to utilize products, materials, and equipment that are made in America, in highway construction and maintenance projects.

Section 5 restricts eligibility for a drive-away in-transit license to the owner of a motor-vehicle transporting business that is located in Minnesota.  The plate is valid while the vehicle is being transported within and outside of Minnesota.

Section 6 creates a reinstatement fee of $100 to reinstate a revoked International Fuel Tax Agreement license.  The proceeds of the fee will be deposited in the vehicle services operating account in the special revenue fund.  This section is effective the day following final enactment. 

Section 7 requires the Commissioner of Transportation to submit required reports concerning highway construction training on an annual basis, instead of the current biennial basis.

Section 8 requires the Commissioner of Transportation to submit required reports concerning the disadvantaged business enterprise program on an annual basis, instead of the current biennial basis.

Section 9 amends language concerning the Transportation Economic Development program to refer to performance measures developed by the Commissioner of Employment and Economic Development, and the extent to which the project promotes access to jobs and connections between transportation modes.

Section 10 provides for active transportation programs.

Subdivision 1 defines terms as follows:

• Administering authority is Department of Transportation (MnDOT), Counties Transit Improvement Board (CTIB), or the Metropolitan Council (Council); and
• Bond-eligible cost is land acquisition, engineering, environmental analysis, construction, or reconstruction of public infrastructure that provides for nonmotorized transportation, and unpaid principal on debt issued by a local government for a nonmotorized transportation project.

Subdivision 2 directs an administering authority to establish a program to support nonmotorized transportation, including, but not limited to, bicycling and pedestrian activities.  The authority may provide grants or other financial assistance for a project.

Subdivision 3 creates an active transportation account in the bond proceeds fund.  Money in the account may be expended on bond-eligible costs of a project on public property.  Two separate active transportation accounts—one for the metropolitan area and one for greater Minnesota—are established in the special revenue fund.

Subdivision 4 specifies program requirements and provides that political subdivisions and tax-exempt organizations are eligible for assistance.  The authority may spend up to one percent of available funds on program administration.

Subdivision 5 expresses a legislative finding that many nonmotorized transportation infrastructure projects are betterments and capital improvements within the meaning of the state Constitution, making them eligible for general obligation bond financing.  The legislature further finds that these projects will be financed more efficiently and economically through general obligation bonding than by direct appropriations.

Subdivision 6 directs the authority to determine bond-eligible costs, which must include bicycle, trail, and pedestrian infrastructure; safe routes to school infrastructure; and noninfrastructure programming.

Subdivision 7 directs the authority to establish a project evaluation and selection process that is competitive and objective.  An eligible project must: be included in a municipal or regional nonmotorized transportation system plan; be located in a jurisdiction with a complete streets policy; support safe routes to school and to other specified community destinations; provide health and safety benefits; and offer geographically equitable benefits.

Subdivision 8 cancels a grant and requires repayment of any spent amount if the grantee has not implemented the project within five years.

This section is effective the day following final enactment.

Section 11 requires the commissioner to spend for an active transportation program out of National Highway Performance Program funds a minimum of $16M in excess of average annual amount spent for transportation alternatives from 2009 to 2012.  The commissioner must implement an active transportation competitive grant program.  This section is effective October 1, 2015.

Section 12 amends language of the rural road safety account to provide that money must be used to improve safety for all road users.

Section 13 provides that grants under the local road improvement fund must be used to improve safety for all road users.

Section 14 directs the commissioner to impose an annual assessment up to a total of $32.5M on railroad companies that are common carriers, Class I Railroads or Class 1 Rail Carriers, and operating in this state. The assessment is divided according to route miles operated in Minnesota.  Proceeds must be deposited in the rail grade crossing safety improvement account and used for highway-rail grade crossing improvements on corridors where crude oil and other hazardous materials are transported.

Section 15 allows the rail service improvement account to be used to pay for capital improvement projects designed to improve capacity or safety at rail yards.

Section 16 transfers the estimated sales tax collected on the purchase of new or used bicycles from the general fund to an active transportation account, to be divided equally between greater Minnesota and the metropolitan area.

Section 17 deals with motorcycle profiling.

Subdivision 1 states the purpose of this section, which is to recognize the problem of motorcycle profiling, and to ensure that traffic stops are legitimate and not based on the fact of riding a motorcycle or wearing motorcycle paraphernalia.

Subdivision 2 defines “motorcycle profiling.”

Subdivision 3 requires the State Patrol, by October 1, 2015, and after consulting with groups, to develop a statewide model training policy to eliminate motorcycle profiling from law enforcement.

Subdivision 4 directs each law enforcement agency, by November 1, 2016, to establish and enforce a written antimotorcycle profiling policy that complies with the State Patrol’s model policy under Subdivision 3.

Subdivision 5 authorizes the State Patrol to inspect agency policies.

Section 18 dedicates the proceeds of the $12 parking violation surcharge to the highway user tax distribution fund, instead of to the general fund under current law.  This section is effective July 1, 2015, for surcharges on violations committed on and after that date.

Section 19 requires the Commissioner of Transportation to establish annually local contribution rates for airport projects that require state or federal funding.  The rates may not be less than five percent of the total cost, except that certain acquisitions where 90 percent federal funding is available may carry a lower local contribution rate.

Section 20 requires the Metropolitan Council, to the greatest extent feasible, to utilize products, materials, and equipment that are made in America, in construction and maintenance projects.

Section 21 requires review of Metropolitan Council procurement of transit vehicles by the Transportation Accessibility Advisory Committee before the transit vehicles are ordered.  This section is effective the day following final enactment.

Section 22 directs the commissioner to adopt, by September 1, 2015, a local cost participation policy that will minimize the required local share, without violating the constitutional requirements restricting use of the trunk highway fund.  This section is effective the day following final enactment.

Section 23 establishes a public private partnership pilot program.

Subdivision 1 allows the commissioner and Metropolitan Council to utilize public-private partnership procurement methods for up to three projects.

Subdivision 2 provides for certain restrictions on project selection.

Subdivision 3 establishes criteria for selection of a private entity and project.

Subdivision 4 establishes minimum provisions that must be part of the public-private agreement.

Subdivision 5 allows the commissioner or council to utilize federal funding for these projects.

Subdivision 6 requires a report to the Legislature by August 1, 2016, and annually, listing and describing agreements under this program.

This section is effective the day after an appropriation is made for the Joint Program Office for Economic Development and Alternative Finance and for the hiring of a consultant.

Section 24 directs the Commissioner of Transportation to acquire certain parcels of real property in St. Louis County as part of the construction of a bridge and approaches along Trunk Highway 23 in Duluth.

Section 25 requires the Commissioner of Transportation to adopt a project data-driven evaluation process for selection of transportation projects.  The process must be reported to the Legislature and ready for use by March 1, 2016.   This section is effective the day following final enactment.

Section 26 requires the Advisory Committee on Nonmotorized Transportation to recommend active transportation project evaluation and selection processes to the administering authorities.  The Advisory Committee may consult with named organizations.  The Advisory Committee’s next report must summarize the recommendations and be provided to the leadership of the legislative transportation committees.  This section is effective the day following final enactment.

Section 27 requires the Commissioner of Management and Budget to report, by January 15, 2016, to the legislative transportation committees, listing expenditures and transfers from the trunk highway and highway user funds from 2010 through 2015.

Section 28 requires the commissioner to adopt design standards and guidelines to be applied consistently to trunk highways, and county and municipal state-aid roads with similar characteristics.  This section is effective the day following final enactment.