Transportation Funding FAQ

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Why is there a budget gap for roads and bridges?
What is the County Board considering as a solution to fix the budget gap?
Have other counties used a wheelage tax and/or sales tax to fund projects this way?
How will the sales tax affect County residents?
How will the wheelage tax increase affect County residents?
How did the County determine which projects would be prioritized for funding?
Why is the County proposing to improve State Roads? Isn’t that the State’s responsibility?

 

Why is there a budget gap for roads and bridges?

The County is facing a $128 million budget gap to complete long-term mobility projects – projects designed to improve traffic flow and safety and reduce congestion – and road expansion projects needed for growth and development. The budget gap can be traced to the following issues related to state and federal funding:

  • The State Highway Investment Plan does not include any funds to expand state roads in the county. It shows zero investment in Highways 5, 7, 41, 101, and 212 in Carver County for the next 20 years.
  • The Metropolitan Council is responsible for distributing $100 million in Federal funds each year to the seven-county metropolitan area. These funds are distributed using a competitive solicitation process. This process has recently changed to focus more on transit, non-motorized transportation, and preservation of roadways, as opposed to expanding and building new roadways. That change virtually excludes Carver County from winning federal transportation funds through this process, particularly for County roadways.

Carver County has a Roadway System Plan that identifies road and bridge improvements needed over the next 20-25 years to meet growth and preserve the current transportation system. The plan includes investment on the County Highway System (County State Aid Highways and County Roads) and a critical portion of the State Highway System (also known as Trunk Highways). The cost for all of the projects in the long-range Roadway System Plan totals more than $1 billion. Paring that plan down to a more realistic level, the County estimates it will need $417 million to compete 22 unfunded high priority projects and road rehabilitation over a 24-year time period. (See the summary of the project “Growing with Safe and Smooth Traffic.”)

Budget projections for the next 24 years estimate the County will have $94 million in County funds available for these high priority projects. County funds come from locally controlled revenue sources that include property tax, county program aid, and the existing wheelage tax ($10 per vehicle), as well as Carver County’s share of revenue from the gas tax, license tab fees, motor vehicle sales tax, and sales tax on leased vehicles. The County anticipates that an additional $195 million will be available from non-county sources. Non-country revenue includes federal, state and city funds for road construction.  The majority of these federal and state funds are anticipated to come from national and state grant programs that are available if the county has significant matching dollars to win them.  Some City funds are expected for local infrastructure elements constructed with the projects.

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What is the County Board considering as a solution to fix the budget gap?

To meet the budget gap for high priority projects, the County Board is considering a proposal that includes:

  • Transportation Sales Tax and $20 Motor Vehicle Excise Tax: A half-percent tax on retail sales and a $20 excise fee on vehicle purchases (which are exempt from the sales tax) is expected to generate $102 million over 24 years.
  • Wheelage Tax: An increase from $10 to $20 per vehicle per year is expected to generate $26 million over 24 years.

The funding generated will be applied specifically to 22 high priority road projects shown on the Map of Unfunded High Priority Projects. State Statue 297A.993 authorizes County Boards, after having a public hearing, to implement by resolution a half-percent sales tax for transportation purposes and a $20 /excise tax on vehicle purchases. It calls for terminating the tax when the revenues raised are sufficient to finance the projects named in the resolution.  

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Have other counties used a wheelage tax and/or sales tax to fund projects this way?

The Map of Counties with Sales/Wheelage Taxes shows 51 out of 87 counties in the state have a wheelage tax. There are 11 counties that have both a wheelage tax and a half-percent sales tax. Five counties have a wheelage tax and a quarter-percent sales tax.

Statewide, 26 counties have implemented a Local Option Sales Tax, including the six other metro counties. If you shop in those counties, you are paying their sales tax and the revenue stays in their county; it does not benefit Carver County.

In 2008, the Counties Transit Improvement Board (CTIB) began using a quarter-percent transit sales tax and $20 motor vehicle excise tax in five metro counties to raise revenue for transitways. Carver County decided not to be part of the CTIB because there was no guarantee the funds raised by the CTIB would be used in Carver County. Scott County also opted not to join the CTIB. Legislation has since allowed non-CTIB counties to levy a half-percent transportation sales tax, and in 2015 Scott County joined the ranks of counties with a sales tax to raise funds for highway projects. Having local revenue from a sales tax has made Scott County more competitive in grant applications. For example, it received $40 million in state and federal funds for one road project after launching the sales tax. 

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How will the sales tax affect County residents?

The increase of a half-percent in sales tax means consumers pay 50 cents on a $100 purchase of taxable items. The sales tax does not apply to vehicles: If you purchase a vehicle, you will pay a $20 excise tax under this proposal.

Items totally exempt from sales tax in Minnesota include clothing, legal drugs, newspapers, and unprepared food, with the exception of candy and soda. Prepared food is subject to special sales tax rates under Minnesota law. Gasoline, alcohol, and cigarettes are subject to various Minnesota excise taxes in addition to the sales tax.

How much you will pay per year in sales tax will depend on the amount of taxable items you purchase.  To estimate what that cost might be per household, we conservatively estimate that 10% of the sales tax revenue will come from people living outside the county. As a result, purchases made by County residents are expected to generate $3.15 million in tax revenue each year. There are currently 36,510 households in the county so we estimate each household will pay, on average, $7.19/month in sales tax on taxable items purchased in the county.

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How will the wheelage tax increase affect County residents?

County residents currently pay a $10 wheelage tax on each vehicle they own. The wheelage tax portion of this proposal will cost you $10 more per year, per vehicle you own. If the proposal is approved, the new $20 wheelage tax per vehicle will be added onto the cost of your tabs.

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How did the County determine which projects would be prioritized for funding?

From the long-range Roadway System Plan the County identified 22 projects considered a high priority. These projects are either partially funded in the short-term 2017-2022 Capital Improvement Plan (see the 2017-2022 Road and Bridge Plan Map) or have no identified funding source (see the Map of Unfunded High Priority Projects) and can be constructed with new revenue from the proposed transportation sales tax and wheelage tax (see the Combined Plan: CIP and High Priority Projects Map.).

The County used the following goals to prioritize projects:

  1. Preserve the existing system, replace deficient bridges, and mitigate known safety issues.
  2. Perform major rehabilitation instead of full reconstruction where possible for highways that have met their useful life.
  3. Address mobility and safety needs on the highest priority corridors regardless of jurisdiction.
  4. Construct new County highways that are needed for growth and development and provide relief to the existing highway system.
  5. Construct projects that improve multimodal connections.
  6. Leverage outside funding sources as much as possible.

The selected high priority projects are categorized as follows:

  • County-Wide Resurfacing/Rehabilitation: Utilizing pavement management data, the County has determined that an additional $20 million is needed beyond current budgeting targets to adequately maintain the County road system. This is based on a target of resurfacing each County roadway every 20 years and performing full-depth reclamation (recycling) when the road is 60 years old.
  • State Highway Improvements: The County has identified 13 State highway intersection or corridor improvement projects with an estimated total cost of $268 million.
  • County Highway Improvements: The County has identified nine County highway improvement projects with an estimated total cost of $129 million.

The high priority projects are listed below and on the Map of Unfunded High Priority Projects. They are not in priority order. The estimated costs include inflation.

 

County Highway Projects  Cost in Millions 
 1. County Rd. 10 (Engler Blvd.) from Hwy. 41 to Hwy. 212/Chaska   $13
 2. County Rd. 10 from Clover Ridge Dr. to County Rd. 11/Chaska  $5
 3. County Rd. 10 from County Rd. 11 to County Rd. 43 (W.)/ Laketown Twp.     $24
 4. County Rd. 11 from 6th St. to County Rd. 40/Carver  $10
 5. County Rd. 18 Extension (82nd St.) from Bavaria Rd. to Hwy. 41/ Victoria, Chaska, Chanhassen    $14
 6. East Waconia Bypass from County Rd. 10 to Hwy. 5/Waconia    $15
 7. County Rd. 14 (Pioneer Tr.) from Hwy. 41 to Bavaria Rd./Chaska    $8
 8. Watertown South River Crossing/Watertown  $11
 9. County Rd. 61 from Engler Blvd. to Bluff Creek Dr./ Chaska, Chanhassen    $29
 Total  $129

 

State Highway Projects  Cost in Millions 
 10. Hwy. 5 from State Hwy. 41 to Rolling Acres Rd./ Chanhassen, Victoria    $25
 11. Hwy. 5 and Rolling Acres Rd. Intersection/Victoria  $4
 12. Hwy. 5 from Rolling Acres Rd. to Victoria Dr. (W.)/Victoria  $22
 13. Hwy. 5 from Main Street to State Hwy 284/Waconia  $10
 14. Hwy. 5 from Oak Ave to Orchard Rd./Waconia  $11
 15. Hwy. 7 and Rolling Acres Rd. Intersection/Victoria  $4
 16. Hwy. 41 and County Rd. 10 Intersection/Chaska  $6
 17. Hwy. 41 from Pioneer Tr. to Lyman Blvd./Chaska  $20
 18. Hwy. 41 and Lyman Blvd. Intersection/Chaska  $5
 19. Hwy. 41 from Lyman Blvd. to Hwy. 5/Chaska, Chanhassen  $13
 20. Hwy. 101 Bluff from Flying Cloud Dr. to Pioneer Trail/Chanhassen  $28
 21. Hwy. 212 from Carver to Cologne/Dahlgren Twp.  $43
 22. Hwy. 212 from Cologne to Norwood Young America/Benton Twp.  $77
 Total  $268

 

The total cost over 24 years is $417 million, which includes $20 million for pavement rehabilitation projects, $129 million for County Road Projects and $268 million for State Highway Projects. 

 

Cost of High Priority ProjectsRevenue Chart 24 Years -vertical

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Why is the County proposing to improve State Roads? Isn’t that the State’s responsibility?

State roads such as Highways 5, 41 and 212 carry the most traffic and have significant safety and condition issues. Yes, it is the State’s responsibility to take care of these highways, but the Minnesota Department of Transportation (MnDOT) has reported it has a $18 billion funding shortfall for roads statewide, and it has no plans to do any significant improvements to roads in Carver County.  Our roads compete for funding in the metro area with highways such as 35W, 94, 494, and 169.  Even if there is a significant increase in revenue from the fuel tax or other proposals, MnDOT has said it will not be able to improve State roads in Carver County on its own. 

We have learned from experience that if Counties are willing to help provide funds, the State and Federal governments are much more likely to provide the remaining dollars to build the projects. Scott County was able to secure $40 million in Federal and State grants for the Highway 169/Highway 41 interchange because they could guarantee some local funding from their sales tax.

This may be perceived as doing the State’s job, but the simple reality is these important projects will never get done without funding partnerships between multiple government agencies.

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