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H0946-0 - Minnesota Management _ Budget

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					Consolidated Fiscal Note – 2007-08 Session                                             Fiscal Impact             Yes        No
                                                                                State                             X
Bill #: H0946-0       Complete Date: 03/18/07
                                                                                Local                             X
Chief Author: LIEDER, BERNIE                                                    Fee/Departmental Earnings                    X
Title: TRANSPORATION FUNDING PROVISIONS MOD                                     Tax Revenue                          X

          Agencies:    Transportation Dept (03/06/07)                      Public Safety Dept (03/06/07)
                       Finance Dept (02/28/07)                             Metropolitan Council (03/06/07)
                       Revenue Dept (03/09/07)

This table reflects fiscal impact to state government. Local government impact is reflected in the narrative only.
                            Dollars (in thousands)       FY07         FY08            FY09           FY10                FY11
 Net Expenditures
      General Fund                                              0         1,260          8,840          9,504              9,535
          Finance Dept                                          0         1,260          8,840          9,504              9,535
      Municipal State Aid Street Fund                                    23,100         37,526         39,818             41,847
          Transportation Dept                                            23,100         37,526         39,818             41,847
      County State Aid Highway Fund                                      87,944        142,863        151,586            159,313
          Transportation Dept                                            87,944        142,863        151,586            159,313
      Trunk Highway Fund                                        0         1,260          8,840          9,504              9,535
          Finance Dept                                          0         1,260          8,840          9,504              9,535
      Highway Users Tax Distribution Fund                                   432            131             38                  3
          Public Safety Dept                                                432            131             38                  3
      Miscellaneous Agency Fund                                                                           755                668
          Public Safety Dept                                                                              755                668
 Revenues
      Water Recreation Fund                                               1,835          4,024          4,328              4,593
           Transportation Dept                                            1,835          4,024          4,328              4,593
      Snowmobile Fund                                                     1,223          2,683          2,885              3,062
           Transportation Dept                                            1,223          2,683          2,885              3,062
      All-Terrain Vehicle Fund                                              184            402            433                459
           Transportation Dept                                              184            402            433                459
      Off-Highway Motorcycle Fund                                            56            123            133                141
           Transportation Dept                                               56            123            133                141
      Off-Road Vehicle Fund                                                 201            440            473                502
           Transportation Dept                                              201            440            473                502
      Misc Special Revenue Fund                                             177            388            417                443
           Transportation Dept                                              177            388            417                443
      Municipal State Aid Street Fund                                    23,100         37,526         39,818             41,847
           Transportation Dept                                           23,100         37,526         39,818             41,847
      County State Aid Highway Fund                                      87,944        142,863        151,586            159,313
           Transportation Dept                                           87,944        142,863        151,586            159,313
      Trunk Highway Fund                                                159,136        258,514        274,298            288,281
           Transportation Dept                                          159,136        258,514        274,298            288,281
      Miscellaneous Agency Fund                                                                        24,000             48,000
           Public Safety Dept                                                                          24,000             48,000
 Net Cost <Savings>
      General Fund                                              0          1,260          8,840          9,504              9,535
           Finance Dept                                         0          1,260          8,840          9,504              9,535
      Water Recreation Fund                                              (1,835)        (4,024)        (4,328)            (4,593)
           Transportation Dept                                           (1,835)        (4,024)        (4,328)            (4,593)
      Snowmobile Fund                                                    (1,223)        (2,683)        (2,885)            (3,062)
           Transportation Dept                                           (1,223)        (2,683)        (2,885)            (3,062)
      All-Terrain Vehicle Fund                                             (184)          (402)          (433)              (459)
           Transportation Dept                                             (184)          (402)          (433)              (459)
      Off-Highway Motorcycle Fund                                            (56)         (123)          (133)              (141)
           Transportation Dept                                               (56)         (123)          (133)              (141)
      Off-Road Vehicle Fund                                                (201)          (440)          (473)              (502)
           Transportation Dept                                             (201)          (440)          (473)              (502)
      Misc Special Revenue Fund                                            (177)          (388)          (417)              (443)
           Transportation Dept                                             (177)          (388)          (417)              (443)


H0946-0                                                                                                                  Page 1 of 18
     Municipal State Aid Street Fund                                 0           0           0           0
         Transportation Dept                                         0           0           0           0
     County State Aid Highway Fund                                   0           0           0           0
         Transportation Dept                                         0           0           0           0
     Trunk Highway Fund                                 0    (157,876)   (249,674)   (264,794)   (278,746)
         Finance Dept                                   0        1,260       8,840       9,504       9,535
         Transportation Dept                                 (159,136)   (258,514)   (274,298)   (288,281)
     Highway Users Tax Distribution Fund                           432         131          38           3
         Public Safety Dept                                        432         131          38           3
     Miscellaneous Agency Fund                                                        (23,245)    (47,332)
         Public Safety Dept                                                           (23,245)    (47,332)
     Total Cost <Savings> to the State                  0    (159,860)   (248,763)   (287,166)   (325,740)

                                                 FY07        FY08        FY09        FY10        FY11
 Full Time Equivalents
     Highway Users Tax Distribution Fund                         1.74        2.16        0.58        0.00
         Public Safety Dept                                      1.74        2.16        0.58        0.00
     Miscellaneous Agency Fund                                                           6.16       11.00
         Public Safety Dept                                                              6.16       11.00
                                  Total FTE                      1.74        2.16        6.74       11.00

Consolidated EBO Comments

I have reviewed this Fiscal Note for accuracy and content.

EBO Signature: NORMAN FOSTER
Date: 03/18/07 Phone: 201-8038




H0946-0                                                                                           Page 2 of 18
Fiscal Note – 2007-08 Session                                                          Fiscal Impact             Yes        No
                                                                                State                             X
Bill #: H0946-0         Complete Date: 03/06/07
                                                                                Local                             X
Chief Author: LIEDER, BERNIE                                                    Fee/Departmental Earnings                    X
Title: TRANSPORATION FUNDING PROVISIONS MOD                                     Tax Revenue                          X

    Agency Name:         Transportation Dept

This table reflects fiscal impact to state government. Local government impact is reflected in the narrative only.
                            Dollars (in thousands)       FY07         FY08            FY09           FY10                FY11
 Expenditures
      Municipal State Aid Street Fund                                    23,100         37,526         39,818             41,847
      County State Aid Highway Fund                                      87,944        142,863        151,586            159,313
 Less Agency Can Absorb
      -- No Impact --
 Net Expenditures
      Municipal State Aid Street Fund                                    23,100         37,526         39,818             41,847
      County State Aid Highway Fund                                      87,944        142,863        151,586            159,313
 Revenues
      Water Recreation Fund                                               1,835          4,024          4,328              4,593
      Snowmobile Fund                                                     1,223          2,683          2,885              3,062
      All-Terrain Vehicle Fund                                              184            402            433                459
      Off-Highway Motorcycle Fund                                            56            123            133                141
      Off-Road Vehicle Fund                                                 201            440            473                502
      Misc Special Revenue Fund                                             177            388            417                443
      Municipal State Aid Street Fund                                    23,100         37,526         39,818             41,847
      County State Aid Highway Fund                                      87,944        142,863        151,586            159,313
      Trunk Highway Fund                                                159,136        258,514        274,298            288,281
 Net Cost <Savings>
      Water Recreation Fund                                             (1,835)        (4,024)        (4,328)          (4,593)
      Snowmobile Fund                                                   (1,223)        (2,683)        (2,885)          (3,062)
      All-Terrain Vehicle Fund                                            (184)          (402)          (433)            (459)
      Off-Highway Motorcycle Fund                                          (56)          (123)          (133)            (141)
      Off-Road Vehicle Fund                                               (201)          (440)          (473)            (502)
      Misc Special Revenue Fund                                           (177)          (388)          (417)            (443)
      Municipal State Aid Street Fund                                         0              0              0                0
      County State Aid Highway Fund                                           0              0              0                0
      Trunk Highway Fund                                              (159,136)      (258,514)      (274,298)        (288,281)
     Total Cost <Savings> to the State                                (162,812)      (266,574)      (282,967)        (297,481)

                                                        FY07           FY08           FY09           FY10            FY11
 Full Time Equivalents
      -- No Impact --
                                      Total FTE




H0946-0                                                                                                                  Page 3 of 18
Bill Description
House File 946 is a major transportation funding bill, containing many features:

    1. Increasing the motor fuel tax by five cents per gallon, effective June 1, 2007 and by another five cents per
       gallon effective June 1, 2008, and also providing for annual increases to the motor fuels tax rate based on
       increases in inflation, beginning on April 1, 2009, with the first adjustment to the motor fuels tax rate
       occurring on June 1, 2009;
    2. Permissive language for counties to levy wheelage taxes of up to $20 per year;
    3. Changing the formula for calculating the motor vehicle registration tax on passenger vehicles by
       increasing the $189 maximum tax for the first renewal to $214, by increasing the $99 maximum tax for
       subsequent renewals to $124, and by increasing the minimum tax to $60;
    4. Allowing counties to, by resolution, impose a general sales tax of up to 0.5% and a tax on the sale of
       motor vehicles of up to $20. Counties would be permitted to use revenue from these taxes for
       construction, reconstruction, and maintenance of county highways and county state-aid highways; public
       transit capital improvements; and operating assistance to public transit systems.
    5. Allowing counties and cities to impose a transportation impact fee on each building permit it issues.
       Revenue from these fees would be spent on projects in a five-year safety and intersection improvement
       plan. The fees would be based on trip generation formulas.
    6. Authorizing $100 million of trunk highway bonds and appropriating the bond proceeds for highway
       construction projects on the trunk highway system and capital improvement appropriations, funded by
       general fund bonds, for local bridges and for the local road improvement program (M.S. 174.52);
    7. Modifying the formula for apportioning money in the county state aid highway fund for new revenue, but
       keeping in place the existing formula for revenue from existing levels of taxes.

Expenditure and/or Revenue Formula

Revenue Changes
Changes in transportation revenues to funds and accounts that affect Mn/DOT would result from provisions in
articles 1and 2.

Article 1 proposes a five cent per gallon increase on June 1, 2007 and another five cent per gallon increase on
June 1, 2008 to the twenty cent per gallon motor fuel tax rate in M.S. 296A, and corresponding, proportional
increases in rates for other fuels that are currently taxed at rates other than twenty cents per gallon. Revenues
from these taxes are deposited in the highway user tax distribution fund, from which they are distributed to the
trunk highway, county state aid highway, and municipal state aid street funds. Based on estimated gallons
incorporated into the estimated motor fuel tax revenue included in the February 2007 fund statement, the
proposed increases would result in the amounts of additional revenue for the funds and accounts shown below.
Note that amounts are shown for a variety of accounts that provide funding for the Department of Natural
Resources. These amounts are due to provisions of M.S. 296A.18 related to “unrefunded taxes.”




Most of the revenue shown above for the county state aid highway fund is made available for apportionments to
the 87 counties. However, a portion of this revenue is further allocated to a flexible highway account, a township
roads account, and a township bridges account. The additional revenues for these entities are shown below.


H0946-0                                                                                                 Page 4 of 18
In addition article 1 proposes annual increases to the motor fuel tax rate based on changes in the United States
Consumer Price Index for all urban consumers, United States city average. The bill provides that the first
adjustment would be calculated in April 2009, and would be effective June 1, 2009. Subsequent adjustments
would be made on June 1 of each year.

The estimated changes in the consumer price index shown in the February 2007 Economic Forecast are being
used in this fiscal note to calculate the new motor fuel tax rates. These percent changes are:

    2008              2.3%
    2009              2.1%
    2010              1.9%
    2011              2.0%

Based on these, the thirty cent per gallon tax rate would be increased to:

June 1, 2009 (for FY 2010)         30.7 cents per gallon
June 1, 2010 (for FY 2011)                 31.3 cents per gallon

The estimated increased revenue for these fiscal years associated with these increases, in addition to that
estimated for the ten cent per gallon increase previously discussed, is shown below.




Most of the revenue shown above for the county state aid highway fund is made available for apportionments to the 87
counties. However, a portion of this revenue is further allocated to a township roads account, a township bridges account,
and a flexible highway account. The additional revenues for these entities are shown below.




H0946-0                                                                                                          Page 5 of 18
Article 2 proposes changes to the tax on passenger motor vehicles. Current law provides that the annual tax is
no more than $189 in the second year of registration and no more than $99 in the third and subsequent years of
registration. House File 946 would change these maximum tax amounts to $214 for the second year of
registration and $124 for the third and subsequent years of registration. It would also increase the minimum tax to
$60. The bill does not provide for a phase-in of this provision by including a provision stating that no one’s tax
would increase in a future year for a currently registered vehicle.

These changes would result in increased revenue for the highway user tax distribution fund (which distributes
revenues to the trunk highway, the county state aid highway, and the municipal state aid street funds). The
amount of increased revenue is estimated using a model developed by Mn/DOT, with participation by the
Departments of Public Safety and Revenue. The estimated increased revenue is shown in the chart below for the
three funds that ultimately receive these revenues.



                        Additional Revenue From Changing the Maximum
                     Tax AmountsTo $214 For the First Renewal and $124 For
                     Subsequent Renewals; Also Setting the Minimum Tax at
                     $60 For Passenger Motor Vehicles, By Fund

                                                 FY 2008       FY 2009     FY 2010     FY 2011
           Municipal State Street                  8,960         9,076       9,194       9,313
           County State Aid Highway               34,111        34,553      35,001      35,455
           Trunk Highway                          61,724        62,525      63,335      64,157
           Total Increased Revenue               104,795       106,154     107,530     108,925



Most of the revenue shown above for the county state aid highway fund is made available for apportionments to the 87
counties. However, a portion of this revenue is further allocated to a flexible highway account, a township roads account,
and a township bridges account. The additional revenues for these entities are shown below.




H0946-0                                                                                                          Page 6 of 18
Total Revenues
The table below contains all of the increased revenues that would result from Articles 1 and 2.




Expenditure Changes
Changes in transportation expenditures to funds and accounts that affect Mn/DOT would result from provisions in
articles 1and 2.

Article 1and 2 would provide additional revenues for the municipal state aid street fund and the county state aid
highway fund. Revenues to these two funds are statutorily appropriated by virtue of their being “apportioned” to
municipalities with population greater than 5,000 and to all 87 counties under provisions of M.S. chapter 162, as
well as other statutory provisions related to the county state aid highway fund. Therefore the same amounts that
were shown previously as revenue proposed for these two funds will be shown as expenditures from the same
two funds.

The total expenditures by Mn/DOT estimated in this fiscal note are shown in the chart below; these are the
amounts that have been entered on the fiscal note.




There are two other articles that have potential expenditure implications, although no expenditure amounts are
being shown. These will be briefly described below.

Article 5 would authorize $100 million of trunk highway bonds, whose debt service is paid by the trunk highway


H0946-0                                                                                                Page 7 of 18
fund, and $100 million of transportation bonds, whose debt service is paid by the state general fund. Fiscal note
procedures state that the Department of Finance will enter debt service costs associated with the sale of bonds in
its fiscal note, while other agencies are asked to describe any increases in ongoing operational costs that might
result from building the projects that would be financed by bonds. Mn/DOT does not anticipate that the programs
that would be financed by bonds proposed in Article 5 would result in increases to its operational costs. The
transportation bond appropriation would be made for deposit to the local road improvement fund, which in turn is
used to make grants to local units of government. Therefore, this would not increase Mn/DOT costs. Mn/DOT
does not believe that the additional highway construction that would be financed by the trunk highway bonds
proposed in article 5 would materially increase its ongoing highway maintenance costs.

Article 6 proposes changes in the apportionment formula for new revenues received by the county state aid
highway fund. These changes would change the nature of spending from the fund (e.g., the amount distributed to
each of the counties), but they would not increase or decrease overall spending from the fund. Counties with
greater population would tend to receive increased apportionments than would be the case under the
apportionment formula in current law.

Long-Term Fiscal Considerations
The increased motor fuel tax and passenger motor vehicle registration tax provisions would continue beyond
fiscal year 2011. The indexing of the motor fuel tax rate would lead to higher tax rates of 0.6 cents per gallon or
more in every year after 2012.

Local Government Revenues and Expenditures
Counties, municipalities with population over 5,000, and townships, would receive increased revenues from the
provisions of Articles 1 and 2. Counties would have the option of levying a wheelage tax of up to $20 per vehicle,
without having to reduce their property tax levy for road and bridge purposes, as proposed in Article 2 If all
counties were to levy this tax at $20 per vehicle, more than $90 million per year would be available to counties for
road improvements. Article 3 would grant the authority to all counties to levy a sales tax of up to 0.5% and a motor
vehicle sales tax of up to $20 per vehicle, upon resolution of the county board; this revenue could be used for
design, engineering, acquisition of real property, construction, reconstruction, and maintenance of county
highways and county state-aid highways; public transit capital improvements; and operating assistance to public
transit systems. Since whether to levy this tax would be optional, no estimate has been made of the amount of
revenue that might be raised from this tax. For reference, a 0.5% sales tax for the entire state would raise an
estimated $350 -$400 million per year on a statewide basis during the fiscal years 2008 – 2011 period (i.e., if all
counties levied this tax). Article 4 would grant authority to cities or counties to impose, by ordinance,
transportation impact fees on building permits that are issued. Generally these fees would be based on traffic
estimated to be generated, based on trip generation formulas. The revenues could be used for projects in a city’s
or county’s five-year safety and intersection improvement plan. This would be permissive language. No estimate
of revenue that might be generated has been made because of this. Article 5 proposes $100 million of capital
improvement appropriations to Mn/DOT, funded by state general fund bonds, with $50 million of this to be used
for local bridges (to match federal money and to replace or rehabilitate local deficient bridges), and $50 million to
be deposited in the account for routes of regional significance in the local road improvement fund established in
M.S. 174.52. Local governments would be eligible for grants of money from this fund. Article 6 would change the
way in which revenue in addition to the amounts currently made available to the county state aid highway fund is
apportioned to the 87 counties. Counties with greater population would tend to have slightly larger amounts of
revenue apportioned to them.




FN Coord Signature: BRUCE BRIESE
Date: 03/06/07 Phone: 297-1203

EBO Comments

I have reviewed this Fiscal Note for accuracy and content.

EBO Signature: NORMAN FOSTER
Date: 03/06/07 Phone: 201-8038



H0946-0                                                                                                  Page 8 of 18
Fiscal Note – 2007-08 Session                                                          Fiscal Impact             Yes     No
                                                                                State                             X
Bill #: H0946-0         Complete Date: 02/28/07
                                                                                Local                                     X
Chief Author: LIEDER, BERNIE                                                    Fee/Departmental Earnings                 X
Title: TRANSPORATION FUNDING PROVISIONS MOD                                     Tax Revenue                               X

    Agency Name:         Finance Dept

This table reflects fiscal impact to state government. Local government impact is reflected in the narrative only.
                            Dollars (in thousands)       FY07         FY08            FY09           FY10            FY11
 Expenditures
      General Fund                                              0         1,260          8,840          9,504           9,535
      Trunk Highway Fund                                        0         1,260          8,840          9,504           9,535
 Less Agency Can Absorb
      -- No Impact --
 Net Expenditures
      General Fund                                              0         1,260          8,840          9,504           9,535
      Trunk Highway Fund                                        0         1,260          8,840          9,504           9,535
 Revenues
      -- No Impact --
 Net Cost <Savings>
      General Fund                                              0         1,260          8,840          9,504           9,535
      Trunk Highway Fund                                        0         1,260          8,840          9,504           9,535
     Total Cost <Savings> to the State                          0         2,520         17,680         19,008          19,070

                                                        FY07           FY08           FY09           FY10            FY11
 Full Time Equivalents
      -- No Impact --
                                        Total FTE




H0946-0                                                                                                              Page 9 of 18
Bill Description
The legislation would provide $50,000,000 of state general obligation bond financing to provide funding for
various transportation projects in the state transportation fund. The legislation would also provide an additional
$50,000,000 of state general obligation bond financing to provide funding for various transportation projects in the
state bond proceeds fund. A total of $100,000,000 of state general obligation bond financed projects to be
financed from the general fund would be funded.

The legislation would also provide $100,000,000 of state general obligation trunk highway bond financing to
provide funding for various trunk highway projects.


Assumptions
It is assumed that state general obligation bonds will be sold to finance the capital projects. The bonds are sold
with level principal payments and mature over 20 years. The costs shown in the fiscal note are the amounts that
would be required to be transferred from the general fund and the trunk highway fund to the debt service fund
annually.

                                         General Fund Bonds       Trunk Highway Bond
Bond Sale Date Interest Rate             Bonds Sold                      Bonds Sold
August 2007                      4.3%           $18,333                  $18,333
June 2008                        4.5%           $24,583                  $24,583
November 2008                    4.6%           $34,167                  $34,167
August 2009                      4.7%           $20,833                  $20,833
June 2010                        4.8%             $2,084                   $2,084


                       General Fund              Trunk Highway Fund
Debt Service     Costs by Fiscal Year            Cost by Fiscal Year
2007                      $-0-                     $-0-
2008                   $1,260                    $1,260
2009                   $8,840                    $8,840
2010                   $9,504                    $9,504
2011                   $9,535                    $9,535




H0946-0                                                                                                Page 10 of 18
                FISCAL NOTE CALCULATOR - FEBRUARY 2007 FORECAST
CASH FLOWS 15/35/35/13/2         Project amount           100,000,000
Cash Flows Time                            FY 2008:1        FY 2008:2       FY 2009:1        FY 2009:2       FY 2010:1        FY 2010:2        FY 2011:1    FY 2011:2
Cash Flow Amount (fill in)               10,000,000        10,000,000      27,500,000       27,500,000      12,500,000       12,500,000                0            0
Sale Date                                     Aug-07           Jun-08          Nov-08           Apr-09          Aug-09           Jun-10          Nov-10       Apr-11
Sale Amount                              18,333,333        24,583,333      34,166,667                0      20,833,333        2,083,333               0            0
Total Sales                             100,000,000                                                                                            FY 2012:1    FY 2012:2
TOTAL DEBT SERVICE                                                                                  Net               Net                             0            0
                     Bond Sales           Fiscal Year         F.Y. Total     Premium           FY Total    Biennial Total                        Aug-11       Jun-12
                              0                  2006              0.00          0.00                                                                 0            0
                              0                  2007              0.00          0.00             0.00              0.00
                     42,916,667                  2008     2,268,750.00 (1,008,333.33)     1,260,416.67                                         FY 2013:1    FY 2013:2
                     34,166,667                  2009    10,847,916.67 (2,008,333.33)     8,839,583.33   10,100,000.00                                 0           0
                     22,916,667                  2010     9,920,833.33   (416,666.67)     9,504,166.67                                           Nov-12       Apr-13
                              0                  2011     9,566,666.67    (31,250.00)     9,535,416.67   19,039,583.33                                 0           0
                              0                  2012     9,108,333.33                    9,108,333.33
                              0                  2013     8,858,333.33                    8,858,333.33   17,966,666.67
                              0                  2014     8,608,333.33                    8,608,333.33
                              0                  2015     8,358,333.33                    8,358,333.33   16,966,666.67
                              0                  2016     8,108,333.33                    8,108,333.33                                                            40
                              0                  2017     7,858,333.33                    7,858,333.33   15,966,666.67
                              0                  2018     7,608,333.33                    7,608,333.33
                              0                  2019     7,358,333.33                    7,358,333.33   14,966,666.67
                              0                  2020     7,108,333.33                    7,108,333.33                                               0.15
                              0                  2021     6,858,333.33                    6,858,333.33   13,966,666.67                               0.35
                              0                  2022     6,608,333.33                    6,608,333.33                                               0.35
                              0                  2023     6,358,333.33                    6,358,333.33   12,966,666.67                               0.13
                              0                  2024     6,108,333.33                    6,108,333.33                                               0.02
                              0                  2025     5,858,333.33                    5,858,333.33   11,966,666.67
                              0                  2026     5,608,333.33                    5,608,333.33                    Biennial Average 12,419,618.06
                              0                  2027     5,358,333.33                    5,358,333.33   10,966,666.67
                              0                  2028     2,985,416.67                    2,985,416.67
                              0                  2029     1,177,083.33                    1,177,083.33    4,162,500.00
                    100,000,000         Total           152,500,000.00 (3,464,583.33) 149,035,416.67 149,035,416.67 Total Interest Expense 52,500,000.00
                                         FY Average       6,579,257.25
            Cash Flow Estimates               Project                                  Total Capital Budget
                     Fiscal Year             20/55/25                      Fiscal Year    15/35/35/13/2
                            2008         20,000,000         10,000,000            2008      15,000,000        7,500,000
                            2009         55,000,000         27,500,000            2009      35,000,000      17,500,000
                            2010         25,000,000         12,500,000            2010      35,000,000      17,500,000
                                        100,000,000                               2011      13,000,000        6,500,000
                                                                                  2012       2,000,000        1,000,000
                                                                                            10,000,000      50,000,000
    FN Coord Signature: PETER SAUSEN
    Date: 02/28/07 Phone: 201-8014

    EBO Comments

    I have reviewed this Fiscal Note for accuracy and content.

    EBO Signature: PEGGY LEXAU
    Date: 02/28/07 Phone: 201-8039




    H0946-0                                                                                                                                             Page 11 of 18
Fiscal Note – 2007-08 Session                                                          Fiscal Impact             Yes        No
                                                                                State                                       X
Bill #: H0946-0         Complete Date: 03/06/07
                                                                                Local                                X
Chief Author: LIEDER, BERNIE                                                    Fee/Departmental Earnings                   X
Title: TRANSPORATION FUNDING PROVISIONS MOD                                     Tax Revenue                          X

    Agency Name:         Metropolitan Council

This table reflects fiscal impact to state government. Local government impact is reflected in the narrative only.
                            Dollars (in thousands)       FY07         FY08            FY09           FY10                FY11
 Expenditures
      -- No Impact --
 Less Agency Can Absorb
      -- No Impact --
 Net Expenditures
      -- No Impact --
 Revenues
      -- No Impact --
 Net Cost <Savings>
      -- No Impact --
     Total Cost <Savings> to the State

                                                        FY07           FY08           FY09           FY10            FY11
 Full Time Equivalents
      -- No Impact --
                                      Total FTE




H0946-0                                                                                                              Page 12 of 18
Bill Description: This bill is an omnibus transportation funding package. The bill increases the motor vehicle gas
taxes by 5 cents in both 2007 and 2008 and indexes annual increases after that based on inflationary increases.
It amends current laws to allow all counties in the state (now just metro) to impose a wheelage tax of up to
$20/year. The formula is changed for calculating the motor vehicle registration tax by raising the maximum tax on
all renewals by $25/year.

Counties, by resolution, would be allowed to impose a general tax of up to ½ cent and place a tax on the sale of
motor vehicles in the county of up to $20/sale. These funds may be used by the counties for constructing and
maintaining county and county state-aid highways, public transit capital improvements and operating assistance
to public transit systems.

The bill would allow cities and counties to impose a transportation impact fee on building permits. The fees would
be calculated on trip generation formulas and the proceeds would be spent on projects included in a five-year
safety and intersection improvement plan. $100 million in trunk highway bonds would also be issued for local
road and bridge improvements. The bill would also modify the formula for distributing funds in the county state-
aid highway fund for new revenue collections.

Assumptions: The bill does not provide any revenue to state funds that would be for distribution to transit
assistance in the metro area or to the Metropolitan Council directly. While it could be assumed that the ½ cent
county sales tax allowed in this bill would be imposed by some counties in the metro area, and that some of these
funds would be used for metro area transit capital improvements and for transit operations, it is impossible to
determine what amount would be provided. This would be a discretionary decision of each of the county boards
in the seven-county area who chose to implement the sales tax. It cannot be determined, as well, how many
counties in the metro area would participate and what amount of sales tax (up to ½ cent) would be imposed in
each county.

Expenditure and/or Revenue Formula: Since there is no direct fiscal impact with this legislation on
expenditures to the Metropolitan Council, there are no calculations to show expenditure from any state funds.
Just a note that the estimated sales tax, if imposed at the full ½ cent and in each county in the metro area, is
projected to generate about $212,000 million if assessed for the full FY 08 fiscal year. It would be unlikely that the
counties choosing to participate would have made a decision to move forward with a sales tax and have it
implemented by July 1, 2007, so for FY 08 this amount would be based on when each county would decide to
participate and enact a resolution to do so.

Long-Term Fiscal Considerations: If the counties would provide some of the sales tax revenues to metro transit
capital improvements and operations, this funding would have impacts into future fiscal years, with some growth
each year in total revenues collected. It is not known how each county would distribute this revenue from year to
year and whether the funding level for transit from the counties would change from year to year.

Local Government Impacts: Counties would have several funding choices for raising additional revenues for
county and county state-aid highways and to assist with funding transit projects and operations. Cities and
counties could also impose a transportation impact fee assessed on traffic and trip generation formulas for road
safety improvements.



Agency Contact Name: Amy Vennewitz, Transp. Plng. 651-602-1058
FN Coord Signature: MIKE KUEHN
Date: 03/05/07 Phone: 602-1364

EBO Comments

I have reviewed this Fiscal Note for accuracy and content.

EBO Signature: NORMAN FOSTER
Date: 03/06/07 Phone: 201-8038




H0946-0                                                                                                 Page 13 of 18
Fiscal Note – 2007-08 Session                                                          Fiscal Impact             Yes         No
                                                                                State                             X
Bill #: H0946-0         Complete Date: 03/06/07
                                                                                Local                             X
Chief Author: LIEDER, BERNIE                                                    Fee/Departmental Earnings                    X
Title: TRANSPORATION FUNDING PROVISIONS MOD                                     Tax Revenue                          X

    Agency Name:         Public Safety Dept

This table reflects fiscal impact to state government. Local government impact is reflected in the narrative only.
                            Dollars (in thousands)       FY07         FY08            FY09           FY10                FY11
 Expenditures
      Highway Users Tax Distribution Fund                                   432            131             38                  3
      Miscellaneous Agency Fund                                                                           755                668
 Less Agency Can Absorb
      -- No Impact --
 Net Expenditures
      Highway Users Tax Distribution Fund                                   432            131             38                  3
      Miscellaneous Agency Fund                                                                           755                668
 Revenues
      Miscellaneous Agency Fund                                                                        24,000             48,000
 Net Cost <Savings>
      Highway Users Tax Distribution Fund                                   432            131             38                   3
      Miscellaneous Agency Fund                                                                      (23,245)            (47,332)
     Total Cost <Savings> to the State                                      432            131       (23,207)            (47,329)

                                                        FY07           FY08           FY09           FY10            FY11
 Full Time Equivalents
      Highway Users Tax Distribution Fund                                   1.74           2.16          0.58               0.00
      Miscellaneous Agency Fund                                                                          6.16              11.00
                                      Total FTE                             1.74           2.16          6.74              11.00




H0946-0                                                                                                              Page 14 of 18
Bill Description

This is a multi-faceted bill with Articles 2 pertaining to Driver & Vehicle Services (DVS). Article 2, section 1
expands the county wheelage tax statewide, increasing the limit and requiring crediting to the road and bridge
fund of the county levying the tax. Article 2, section 2 modifies the imposition of the motor vehicle registration
tax on passenger automobiles in subsequent years.

Assumptions

Section 1:
Assumes no other legislation requiring major programing changes is enacted, DVS believes the earliest it could
complete programing changes to expand the wheelage tax state-wide would be for the registration period
assigned by the registrar beginning January 1, 2010, or later.
Since the “wheelage tax” is optional for the counties, it cannot be determined how many counties would
implement the “wheelage tax” or the amount of the tax.
Assumes all counties implement the “wheelage tax”.
Assumes an average “wheelage tax” amount of $10.00.
Assumes 4.8 million vehicles would be subject to the “wheelage tax”.
Assumes that counties can authorize up to $20.00 each year, that any amounts authorized would be whole dollar
amounts.
Assumes there would be variable whole dollar tax amounts (e.g., $5, $6, $11, $18, etc.).
Assumes the tax would be collected by the state.
Assumes DVS would need one MA2 position to administer the “wheelage tax”.
Assumes DVS would need one permanent CSSI position to administer fleet registration.
Assumes DVS would need two permanent CSS Sr positions and two temporary (12 – 18 months) CSS Sr
positions to handle phone inquiries.
Assumes DVS would need two permanent OAS positions and two temporary (12 – 18 months) OAS to handle
manual verifications of qualifying counties and returning applications with improper fees.
Assumes DVS/OTSS would need one permanent ITS 4 application programmer beginning 7/1/2009.
Assumes an annual mailing expense of $6,000.
Assumes one time programming cost of $230,571.
Assumes a one time programming cost for the Prorate Explore system of $100,000.
Assumes on-going operations cost of $3,360 annually.
Assumes the counties would request a tape of information quarterly showing vehicles registered in their county at
a cost of $100 each request.
Assumes an account code for each county would have to be established at a cost of $3,000 each county.
Assumes all costs associated with the collection of the “wheelage tax” would be appropriated to DVS.
Section 2:
Assumes no other legislation requiring major programing changes will be enacted.
Assumes an effective date to be the day after signing, for the registration period assigned by the registrar
beginning January 1, 2008, or later.
Assumes the $25.00 registration tax increase is for any vehicle filing its initial registration.
Assumes DVS would need two temporary CSS Sr positions from 12/1/07 to 1/31/09 (14 months) and one
temporary CSS Sr position from 12/1/07 to 1/31/10 (26 months) to handle inquiries on the new rates.
Assumes a one-time programming cost of $281,142.
Assumes on-going operations cost of $3,360 annually.




H0946-0                                                                                                 Page 15 of 18
Expenditure and/or Revenue Formula

Section 1:
Based on the assumptions that the authorized wheelage tax will be in whole dollars and there will be variable
rates.
Programming cost FY10: 230,571
                          Prorate Explore system $100,000.
On–going maintenance cost $3,360 annually beginning in FY11.
Mailing cost $6,000 each year.
Salary/benefits/rent/phones:
Management Analyst 2 (step 5) 1 FTE at an estimated cost: FY10 $38,400 (7 months); FY11 $66,300.
Customer Svcs Spec Int (step 5) 1 FTE at an estimated cost: FY10 $32,500 (7 months); FY11 $56,000.
Customer Svcs Spec Sr (step 5) 4 FTE at an estimated cost: FY10 $118,000 (6 months); FY11 $236,300.
Office & Admin Spec (step 5) 4 FTE at an estimated cost: FY10 $106,900 (6 months); FY11 $214,000.
Information Technology Spec 4 (step 5) 1 FTE at an estimated cost: FY10 $86,400; FY11 $86,400.
One time expenses for 6 FTE of $36,500 in FY10.

Section 2:
Programming cost FY08: $281,142.
On–going maintenance cost $3,360 annually beginning in FY09.
Salary/benefits/rent/phones:
Customer Svcs Spec Sr (step 5) (14 months) 2 FTE at an estimated cost: FY08 $66,165 (7 months); FY09
$68,324 (7 months).
Customer Svcs Spec Sr (step 5) 1 FTE at an estimated cost: FY08 $66,165 (7 months); FY09 $58,900 (12
months); FY10 $34,213 (7 months).
One time expenses for 3 FTE of $18,225 in FY08.

Revenues:
Section 1:
Based on an average “wheelage tax” of $10.00 and 4.8 million vehicles subject to the tax; $48,000,000.00.

Section 2:
Estimated revenue increase for Registration tax: See MnDOT section of fiscal note.

Long-Term Fiscal Considerations



Local Government Costs



References/Sources



Agency Contact Name: Larry Ollila 651 201-7654 Tom Nash 201-7582
FN Coord Signature: FRANK AHRENS
Date: 03/05/07 Phone: 201-7050

EBO Comments

I have reviewed this Fiscal Note for accuracy and content.

EBO Signature: NORMAN FOSTER
Date: 03/06/07 Phone: 201-8038




H0946-0                                                                                              Page 16 of 18
Fiscal Note – 2007-08 Session                                                          Fiscal Impact             Yes        No
                                                                                State                             X
Bill #: H0946-0         Complete Date: 03/09/07
                                                                                Local                             X
Chief Author: LIEDER, BERNIE                                                    Fee/Departmental Earnings                   X
Title: TRANSPORATION FUNDING PROVISIONS MOD                                     Tax Revenue                          X

    Agency Name:         Revenue Dept

This table reflects fiscal impact to state government. Local government impact is reflected in the narrative only.
                            Dollars (in thousands)       FY07         FY08            FY09           FY10                FY11
 Expenditures
      -- No Impact --
 Less Agency Can Absorb
      -- No Impact --
 Net Expenditures
      -- No Impact --
 Revenues
      -- No Impact --
 Net Cost <Savings>
      -- No Impact --
     Total Cost <Savings> to the State

                                                        FY07           FY08           FY09           FY10            FY11
 Full Time Equivalents
      -- No Impact --
                                      Total FTE




H0946-0                                                                                                              Page 17 of 18
Bill Description – Article 3 of the proposed bill would allow any county to levy a sales tax of up to one-half of one
percent on retail sales and uses taxable under chapter 297A.

The revenue impact of the proposed bill is not included in the Department of Revenues fiscal note; please refer to
the Department of Transportations fiscal note.

There will be a fiscal impact to the Department of Revenue if the proposed bill passes.

Fiscal Impact Assumptions
•       The department will incur upfront systems costs along with the on-going administrative, collection, audit,
    and enforcement costs for a new county sales tax. The department will be reimbursed for these costs from
    the proceeds of these taxes.

Long-Term Fiscal Considerations
None


Local Government Costs
None




References/Sources


FN Coord Signature: JOHN POWERS
Date: 03/07/07 Phone: 556-4054

EBO Comments

I have reviewed this Fiscal Note for accuracy and content.

EBO Signature: ALEXANDRA BROAT
Date: 03/09/07 Phone: 201-8026




H0946-0                                                                                                 Page 18 of 18

				
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