1. House Transportation Policy and Finance April 13, 2016 Tracy Hatch Deputy Commissioner Chief Financial Officer / Chief Operating Officer

2. Funding Components: New revenues dedicated to roads and bridges: Implement a 6.5% gross receipts tax on fuel with a $2.50 wholesale price floor (minimum 16.3 cent tax) Increase registration fees for motor vehicles from 1.25% to 1.50% and increase base tax from $10 to $20, phased in over four years Authorize $2 billion in bonds over the next 10 years 2

3. 3 $11.396B $8.401B Roads and Bridges $6B State roads $5.44B investment $0.56B efficiencies $2.401B County, City, Townships $0.075B Bike and Ped $2.92B Transit $2.8B Twin Cities Metro $0.120B Greater MN Transit

4. 4 ($1,000s)FY 2017FY 2018FY 2019 Net Wholesale Gross Receipts Tax 317,014486,774483,862 Registration Taxes 21,23089,710117,050 Less DOR Admin Costs (234) (222) HUTD Fund Total 338,010 576,262 600,690 Trunk Highway 194,348332,139346,571 County State Aid Highways 90,905155,356162,106 Municipal State Aid Streets 28,21248,21450,309 5% Set-aside (CSAH) 16,49828,19529,420 DNR 8,04812,35812,284 Total Distributions 338,010576,262600,690

5. $6 billion for state roads and bridges ◦ $5.44B from new revenue and bonding ◦ $0.56B in efficiencies $ 2.4 billion for counties, cities, and townships Fully funds the preservation, modernization, and some strategic expansion of the state system Provides a 30% increase in county/city/township road and bridge funding 5

6. $120M in General Fund investment for Greater Minnesota Transit 90% of forecast need for Greater MN transit Integrated transportation system that improves movement across the state $75M for bike and pedestrian infrastructure, including Safe Routes to School 6

7. FY 16-17 7

8. Increase the state road construction appropriation to enable MnDOT to spend the increase in federal funding due to the FAST Act enacted in December 2015 An increased appropriation of $90 million in FY 2016-17 and $145 million in FY 2018-19 The FAST Act provides for a modest increase in the federal formula funds expected to be received in Minnesota compared with MAP-21, the prior federal program 8

9. Establish a snow and ice management appropriation in the trunk highway fund Sets the department’s annual appropriation for snow and ice service at $65 million per year. The $65 million appropriation provides greater assurance in extreme winters that MnDOT can meet public performance expectations without sacrificing spring/summer maintenance Allows MnDOT to use existing trunk highway fund balance when costs exceed 110% of MnDOT’s biennial appropriation for snow and ice service 9

10. Annual assessment of $32.5 million for rail grade crossing improvement projects Funding would be provided through an assessment on Class I Railroads Crude oil rail traffic has increased since 2005 2014 Study (2014, Ch. 312 art 10 sec 10) identified safety Improvements Reduce or eliminate grade crossing crashes, fatalities and injuries Reduce delays to the motoring public and to emergency responders who are hindered by trains crossing roadways 10

11. Increase grade crossing safety account funding from $1 million to $2.5 million per year Fund additional grade crossing improvements on either the trunk highway system or local road system Significant increase in safety projects that can be programmed rapidly: Signal circuitry upgrades Right-of-way acquisition needed for grade crossing projects Preserving access due to crossing closures from road construction 11

12. Hire up to four additional rail inspectors, plus a program manager Provide more comprehensive inspection activities Ensure compliance with federal and state safety regulations to: Decrease derailments, grade crossing crashes, and rail worker hazards Identify defects before they become critical Help reduce the number of rail accidents resulting in injuries, fatalities, property damage and environmental damage These positions are funded through an assessment on the Class I and Class II railroads, estimated at about $700,000/year Clarifies costs that should be assessed to railroads and better align inspector duties to federal definitions 12

13. $1.313 million appropriation from General Fund in FY 2017, $185,000 is a base increase Funds Interagency Rail Director to: Address rail safety, service and impacts on communities Work with the new Interagency Rail Working Group of state agencies – sets priorities, implement strategies Provide faster and more coordinated response to rail issues Includes funding in FY 2017 for critical freight rail activities at MnDOT Due to the increased rail traffic, increased responsibilities: Respond to inquiries/complaints from local communities and rail shippers New state and federal regulations and legislation Serve as liaison with railroads and FRA 13

14. A one-time $313,000 appropriation from the state airports fund Provide system updates to accommodate aircraft registration and commercial operator licensing of unmanned aircraft systems (drones) Legislation streamlines the application of existing state and federal laws regulating drones Help to ensure aviation safety as well as safety and privacy of individuals 14

15. Tracy Hatch Deputy Commissioner Chief Financial Officer & Chief Operating Officer 651.366.4811 tracy.hatch@state.mn.us 15