5.5. SR 03-24-2003 - Laserfiche WebLink

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Section 2: How is the system funded? Understanding how the current transportation funding system works is critical for decision makers who want to deal responsibly with the maintenance and preservation needs of roads and bridges in Minnesota cities. Minnesota's cities finance their road and bridge infrastructure through a variety of local, state and federal resources. The emphasis in this report will be on local and state funding sources, since the intended audience of this report is state and local officials. Federal resources are described briefly, but since they do not represent a significant source of funding available to finance roads and bridges in most Minnesota cities, a detailed discussion of federal aid to cities is not included in this report. Local Funding Sources With few exceptions, Minnesota cities are reliant on their own, locally generated sources of revenue to finance most road and bridge infrastructure improvements. Figure 4 shows the share of state and local revenue sources supporting roads and bridges in Minnesota cities in 2000 according to data reported by cities to the State Auditor. As the chart indicates, the largest three sectors of the pie - proceeds from the sale of bonds, property taxes/special assessments, and local general funds -are all locally generated sources of revenue that are reliant on property taxes. These sources representing nearly 75 percent of all revenues used to support road and bridge construction by Minnesota cities. The distribution of revenues to cities shown in Figure 4 is consistent with the information reported by Minnesota cities in the 2002 City Road and Bridge Funding Survey conducted for this study. Figure 5 Figure 4 Distribution of ~nnesota Cities' Revenues for Roadw ay Furposes Maintnenance and Construction Costs, FY 2000 [] Interest · Miscellaneous ~ State General Earnings $37.2M Funds $52.3M % $116.5M 5% ~ 3% · Proceeds from 10% Sale of Bonds [] State Highw ay $168.7M User Taxes 15% $100.7M 9% [] Property Taxes/Special Assessments ~ $215.6M N 19% SAOuudr,~;:r Office of the State [] Local General Fund ~.~~ $437.6M 39% indicates that for cities under 5,000 who responded to the survey,, two-thirds of the road and bridge revenues come from property tax based revenues including bonding, special assessments, and general (property tax) revenues. For larger cities that are more reliant on state aid and other state and federal funding, the portion of property tax based revenues is well over 50%. 6