Follow the money

Transportation funding...
IT'S COMPLEX

The transportation system Minnesota relies on to move people and goods throughout the state is large and complex. It is a network of roadways, bikeways, walkways, transitways, airways, railways and waterways, and a lot of supporting infrastructure. Providing the money to build it, maintain it and keep it running smoothly is a big job. It involves many partners and even more sources of funding. Each part of the system involves a different mix of partners and funding sources.

This is an illustrative summary based on a typical year. We used real data but sources and percentages are generalized.

About Minnesota's transportation system

FEDERAL TRANSPORTATION SPENDING (in Minnesota)

$1.3B (Typical year)

MINNESOTA TRANSPORTATION SPENDING (State dollars only)

$2.7B (Typical year)
WHAT ABOUT LOCAL & PRIVATE SPENDING?

LOCAL SPENDING

Local funding sources — city, county and regional — make up the majority of transportation spending in Minnesota. For example, local property taxes are the largest single source of funding for roadways in Minnesota. They account for approximately 52 percent of all roadway spending. Revenue from transit fares is another common example of a local funding source.

PRIVATE SPENDING

For some types of transportation, the majority of funding comes from private businesses. Rail spending is a good example of this. While public agencies do make investments on the freight rail system, the majority of spending comes from the private railroad companies that own and operate the tracks.

This summary focuses on state and federal sources of funding only. It’s not reflective of the whole funding pie, or even the biggest slice. Local and private sources are not included. Simply put, we don’t have the data.

WHERE THE MONEY COMES FROM (state & federal money only)

More information about our data


We focused on the big and common sources of transportation funding. Small or infrequent sources are not captured. Think of this summary as what is spent on Minnesota’s transportation system in a “typical year.”

Some funding sources include state and federal money. For example, you pay both a state and federal fuel tax when you fill up your tank. For the purposes of this summary, “fuel tax” includes revenue from both.

This summary is not just construction money. It includes funding for operations, maintenance, and administrative activities. However, we cannot account for all spending that impacts transportation in Minnesota. For example, it's impossible to quantify how much of the work that occurs at various federal transportation agencies is for Minnesota.

We did not include Trunk Highway Bonding as a funding source because they are paid back with transportation funding sources over time. In the long run, they do not add money to the overall transportation pot. However, General Obligation Bonds are included. They are paid back with non-transportation funding sources over time. They act like a funding source for transportation projects because they add value to the overall pot of transportation funding.

Loan programs are not included because the money that is used to payback these loans is generally local or private. This summary focuses on State and Federal sources only.

Fuel tax

40%

ABOUT THE FUEL TAX

A fuel tax (also known as a gas tax) is a tax imposed on the sale of fuel. You pay both a state and federal fuel tax when you fill up your tank. The state fuel tax can only be spent on transportation – it’s in Minnesota's constitution! The federal fuel tax is also explicitly reserved for transportation spending in law.

The majority of all fuel tax revenue is spent on the roadway system — roads, bridges, sidewalks and on-road bicycling and walking facilities. While 100% of the state gas tax goes to roadways, some federal fuel tax revenue also goes to support transit, rail crossing improvements and occasionally off-road bicycling and walking facilities.


Current Fuel Tax

Graphic showing equations for tax rate

Historical Fuel Tax Rate in Minnesota

Chart showing fuel excise rates

State Fuel Tax Rates

Map showing tax rates by state
How the Fuel Tax is distributed
  • Federal Fuel Tax
    • Transportation Trust Fund
      • Highway Account (80%)
      • Mass Transit Account (20%)
  • State Fuel Tax
    • Highway User Tax Distribution Fund
      • Distributed Funds (95%)
        • Trunk Highway Fund (62%)
        • County State-Aid Highways (29%)
        • Municipal State-Aid System (9%)
      • Set-Aside Funds (5%)
        • Flexible Highway Account (53.5%)
        • Town Roads (30.5%)
        • Town Bridges (16%)
      • Transfer to Department of Natural Resources

This funding goes towards:

Roads and Bridges: 80% Transit: 19% Offroad Facilities: <1% Rail: <1%

Vehicle registration tax & fees

18%

ABOUT VEHICLE REGISTRATION TAXES & FEES

For passenger vehicles, the amount you pay in registration tax is determined by your vehicle's original value and age. Revenue from tab fees (processing fees you pay when you register your vehicle each year) and wheelage tax are also included in this funding category. Revenue from vehicle taxes and fees goes entirely to support the roadway system — roads, bridges, sidewalks and on-road bicycling and walking facilities.

Current law sets a base fee of $10 to register your vehicle, but then adds an additional cost of 1.25 percent of the value of the vehicle. The value of the vehicle is depreciated by 10 percent each year until year 11. For year 11 and on, the minimum amount paid is $35.

Learn more about vehicle registration tax

Image of license plate and registrationMinnesota Department of Public Safety
How Vehicle Tax & Fees are distributed
  • State Vehicle Taxes & Fees
    • Highway User Tax Distribution Fund
      • Distributed Funds (95%)
        • Trunk Highway Fund (62%)
        • County State-Aid Highways (29%)
        • Municipal State-Aid System (9%)
      • Set-Aside Funds (5%)
        • Flexible Highway Account (53.5%)
        • Town Roads (30.5%)
        • Town Bridges (16%)
      • Transfer to Department of Natural Resources

This funding goes towards:

Roads and Bridges: 100%

Vehicle sales tax

19%

ABOUT VEHICLE SALES TAX

Motor vehicles sales are exempt from Minnesota’s general sales tax of 6.875 percent (or more in certain cities). Instead, most vehicles are subject to a 6.5 percent motor vehicle sales tax. The tax applies to sales by car dealers and private individuals. All revenue from the motor vehicle sales tax is dedicated to transportation — it's in Minnesota's constitution. The majority of revenue goes to supporting the roadway system — roads, bridges, sidewalks and on-road bicycling and walking facilities. However, it also provides significant support for transit throughout the state.

There is also a motor vehicle lease sales tax, which is a 6.5 percent tax on vehicle leases in Minnesota. Transportation revenue from this tax is split in terms of supporting roadways and Greater Minnesota transit.

Learn more about vehicle sales tax.

What's it about M C Morgan
How Vehicle sales tax is distributed
  • State Motor Vehicle Sales Tax (60%) State Motor Vehicle Lease Sales Tax (62%)11%
    • Highway User Tax Distribution Fund
      • Distributed Funds (95%)
        • Trunk Highway Fund (62%)
        • County State-Aid Highways (29%)
        • Municipal State-Aid System (9%)
      • Set-Aside Funds (5%)
        • Flexible Highway Account (53.5%)
        • Town Roads (30.5%)
        • Town Bridges (16%)
      • Transfer to Department of Natural Resources
    • Metro Collar Counties - Roads (38%)
    • Local Bridges (13%)
    • State Motor Vehicle Sales Tax (40%)
      • Transit Assistance Fund
        • Metropolitan Transit (90% of MVST)
        • Greater MN Transit (10% of MVST & 100% of MVLST)
    • State Motor Vehicle Lease Sales Tax (38%)

This funding goes towards:

Roads and Bridges: 58% Transit: 42%

Air taxes & fees

2%

ABOUT AIR TAXES & FEES

Most of Minnesota’s public airports are the responsibility of local units of government. However, they receive the majority of funding for construction projects from federal sources. State sources also contribute to construction projects but are a larger source for airport maintenance and operations activities. At the state and federal level, much of this funding comes from air taxes and fees.

Airline passenger taxes

There are a number of federal taxes charged to airlines related to passenger air travel. These taxes are often included directly in the price you pay for airline tickets. In general, the domestic airline taxes include:

  • Domestic passenger ticket tax – 7.5 percent of ticket price
  • Domestic segment tax – $4.10 per flight leg
  • International arrival and departure tax – $18.00 per passenger
  • Tax on flights between the continental United States and Alaska or Hawaii – $9.00 per person
  • Frequent flyer awards tax – 7.5 percent of value of miles

Revenue from airline passenger taxes is deposited in the Airport & Airway Trust Fund, a dedicated source of funding for the U.S. aviation system.

Air cargo waybill tax

For domestic shipments, federal taxes are imposed on air cargo waybills (documents issues by freight carriers with information about the shipment) at a rate of 6.25 percent of the price paid for the air transportation. Revenue from air cargo taxes is deposited in the Airport & Airway Trust Fund, a dedicated source of funding for the U.S. aviation system.

Overflight fees

The Federal Aviation Administration charges overflight fees to aircraft operators who fly in airspace controlled by the United States but that don’t take off or land in the U.S. The rate is based on where you fly - over land is approximately $60 per 100 nautical miles traveled and over ocean is approximately $25 per 100 nautical miles traveled.

Airline flight property tax

Any person or business that engages in either passenger or freight air commerce in Minnesota is required to pay the airline flight property tax. The amount paid is based on the air flight assets – aircraft and flight equipment – they own. Revenue from the air flight property tax is deposited in the State Airports Fund and dedicated by law to aviation in Minnesota.

Aircraft sales tax

The sale of aircraft in Minnesota is taxed at the state’s general sales tax rate of 6.875 percent. However, 0.375 percent of this tax revenue is directed to the Clean Water, Land & Legacy Amendment Funds. The State Airports Fund receives 6.5 percent of the tax revenue collected. This portion of the revenue is dedicated by law to aviation in Minnesota.

Aircraft registration tax/fees

The aircraft registration tax is charged annually to all aircraft owners. The amount paid is based on the manufacturer list price of the aircraft. However, there are different fee structures for antique/classic aircraft, recreational aircraft, and other special-use aircraft. Revenue from aircraft registration taxes/fees is deposited in the State Airports Fund and dedicated by law to aviation in Minnesota.

Learn more about aircraft registration taxes and fees.

Aviation fuel tax

Just like you pay a gas tax when you fill up your car’s tank, pilots pay a fuel tax when they fill up planes. There are both state and federal taxes on aviation fuel. Currently, the state aviation fuel tax is $0.05 per gallon and the jet fuel tax is $0.15 per gallon. Revenue from this tax is deposited in the State Airports Fund and dedicated by law to aviation in Minnesota. The federal fuel tax for general aviation (non-commercial) is $0.193 per gallon for gasoline and $0.218 per gallon for jet fuel. For commercial aviation, the fuel tax is $0.043 per gallon. Revenue from the federal aviation fuel tax is deposited in the Airport & Airway Trust Fund, a dedicated source of funding for the U.S. aviation system.

How air taxes & fees are distributed
    • Air flight property tax
    • Aircraft sales tax
    • Aircraft registration tax/fees
    • State aviation fuel tax
    • State Airports Fund
    • Airline passenger taxes
    • Air cargo waybill tax
    • Federal avation fuel tax
    • Other income
    • Airport & Airway Trust Fund
    • Overflight fees
    • Federal Aviation Administration

This funding goes towards:

Air: 100%

Waterway taxes & fees

<1%

ABOUT WATERWAY TAXES & FEES

Most port terminals in Minnesota are privately owned and funded entirely through private sources. However, Minnesota’s waterway navigational channels and locks and dams are maintained through the U.S. Army Corps of Engineers. The funding for this work comes from federal waterway taxes and fees like:

Harbor maintenance tax

The Harbor Maintenance Tax is a 0.125 percent federal tax on commercial cargo shipped domestically within and imported to the United Stated, based on value of the goods. The Harbor Maintenance Tax is charged to the owner of the cargo. Revenue from the tax is deposited into the Harbor Maintenance Trust Fund and goes to support maintenance and operations of the commercial waterway transportation system.

Cruise line passenger ticket tax

Similar to the Harbor Maintenance Tax, a there is a 0.125 federal tax on the sale of cruise line passenger tickets at designated ports, based on value of the tickets. Revenue from the tax is collected by U.S. Customs and deposited into the Harbor Maintenance Trust Fund, which goes to support maintenance and operations of the commercial waterway transportation system.

Waterways fuel tax

Just like you pay a gas tax when you fill up your car’s tank, there is a fuel tax on the sale of fuel used in commercial waterway transportation in the United States. Currently, the waterway fuel tax is $0.29 cents per gallon. Revenue from this tax is deposited in the Inland Waterways Trust Fund and goes to support maintenance and operations of the commercial waterway transportation system.

Special recreation user fees

The U.S. Army Corps of Engineers charges fees for recreational use of their facilities, such as boat launches and swimming beaches. These fees are collected directly by the U.S. Army Corps of Engineers and distributed for specific uses through their budgeting process.

State funding for ports and waterways comes from the non-transportation sources and is accounted for in that part of the summary

Minnesota Ports & Locks

What's it about
How waterway taxes & fees are distributed
    • Harbor Maintenance Tax
    • Cruise line passenger
    • Interest earned
    • Harbor Maintenance Trust Fund
    • Waterway fuel tax
    • Interest earned
    • Inland Waterways Trust Fund
    • Special recreation user fees
    • U.S. Army Corps of Engineers

This funding goes towards:

Waterways: 100%

Rail fees

<1%

ABOUT RAIL FEES

Freight railroads are primarily funded through spending by private companies. However, there are a few publicly owned railway that use public funding. The freight rail system is also occasionally supported by public funding through public-private partnership projects.

Existing passenger rail service, Amtrak, is funded partially by public funding, specifically public funding at the federal level. Planning and development of future passenger rail service comes primarily from state funding sources.

In general, most public funding for the rail system is from non-transportation sources and is accounted for in the personal, business & other taxes part of the summary. However, a small portion of rail state funding comes from fees.

Special Assessment on Class I & Class II Railroads

The State collects a special assessment of Class I and Class II railroads operating in Minnesota. The funding can only be used for the Rail Safety Inspection program which provides inspection of all rail facilities in the state.

What's it about
How Rail fees are distributed
  • Special assessment on Class I & II railroads
  • Rail safety inspection program

This funding goes towards:

Rail: 100%

Other transportation taxes & fees

5%

ABOUT OTHER TRANSPORTATION TAXES & FEES

In addition to the major funding sources for transportation like the fuel tax, vehicle taxes and fees, and vehicle sales tax, there are a number of smaller sources of transportation revenue. These smaller sources mostly go towards funding roadways and transit. They include:

Other federal taxes & fees:

  • Tax on trucks and trailers
  • Use tax on certain vehicles
  • Tire tax on trucks
  • Earned interest on transportation accounts

Other state taxes & fees:

  • Fines
  • Permit fees
  • Sale of land or equipment
  • Earned interest on transportation accounts

This funding goes towards:

Roads and Bridges: 71% Transit: 28% Rail: 1% Offroad Facilities: <1%

Personal, business, & other taxes

16%

ABOUT PERSONAL, BUSINESS & OTHER TAXES

Not all public transportation funding comes from transportation sources. It also comes from personal, business or other general taxes. For some parts of the system, like railways, this makes up a lot of the funding. For other parts, like roadways, this is a small portion. However, it’s important to note that all parts of the system are funded to some extent by non-transportation sources. Usually, this funding gets to transportation via direct appropriations or transfers from the federal or state general funds.

As an example, Congress transferred $70 billion from the Federal General Fund to the Transportation Trust Fund in 2016 to help pay for the transportation spending bill they passed in 2015. Over $140 billion dollars have been transferred from the Federal General Fund to support transportation — mostly roadways — since 2008.

Learn more about the federal and state general funds:

Federal general fund

Unless otherwise directed, revenue collected by the federal government is deposited in the Federal General Fund. The fund pays for a wide variety of government activities. The largest source of revenue for the federal general fund is the individual income tax. Other major sources include the payroll tax (a tax imposed on employee wages) and corporate income tax (a tax on the profits of U.S. corporations).

State general fund

The State General Fund is the main place that revenue collected by our government in Minnesota is deposited. The fund is used for the general operations of the State. It does not include funding dedicated to specific purposes, like how the state gas tax is constitutionally dedicated to the Trunk Highway Fund. The main sources of revenue that make up the State General Fund are: individual income taxes, state sales taxes, and business taxes.

This funding goes towards:

Air: 1% Rail: 3% Roads: 32% Offroad Facilities: 5% Transit: 52% Waterways: 7%

WHERE THE MONEY GOES (state & federal money only)

More information about our data


This summary combines similar state and federal funding together. For example, revenue from both the state fuel tax and federal fuel tax is included in the “fuel tax” category.

This summary shows how the combined state and federal funding is distributed. The split may be different for sources individually.

There are both dedicated and discretionary funding included in this summary. The summary shows how the combined funding is distributed in a "typical year."

  • Dedicated funding: Many sources of funding are dedicated to specific projects, types of activities or modes of transportation. This can be by policy, law and even the state constitution. Spending less in one area does not necessarily mean spending for something else could increase.
  • Discretionary funding: Other sources of funding are discretionary. The agency or organization that receives it is able to determine how to spend it. This is typically done through established budgeting processes.

Federal program information is based off on the FAST Act. State information is based on fiscal year 2017 programs.

69%Roadways

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See who distributes the funding

Who is responsible for distributing funding to Roadways?

FEDERAL AGENCIES THAT DISTRIBUTE FUNDING
NHSTANational Highway Traffic Safety Administration

Ways in which funds are distributed to roadway projects

Section 402 Formula Grants Section 405 National Priority Safety Programs
FMCSAFederal Motor Carrier Safety Administration

Ways in which funds are distributed to roadway projects

Motor Carrier Safety Assistance Program New Entrant Assurance Program
U.S. DOT OSTU.S. Office of the Secretary

Ways in which funds are distributed to roadway projects

TIGER Program (Transportation Investment Generating Economic Recovery)
STATE AGENCIES AND BOARDS THAT DISTRIBUTE FUNDING
MnDOTMinnesota Department of Transportation

Ways in which funds are distributed to roadway projects

Statewide Performance Program(State Road Construction Program) District Risk Management Program(State Road Construction Program) District C(State Road Construction Program) Transportation Economic Development(State Road Construction Program) Corridors of Commerce(State Road Construction Program) Other small programs(State Road Construction Program) State Highway Operations & Maintenance Budget Infrastructure Program(Safe Routes to School Program) Non-Infrastructure Program(Safe Routes to School Program)
Minnesota Legislature

Ways in which funds are distributed to roadway projects

General obligation bonding
DPSMinnesota Department of Public Safety

Ways in which funds are distributed to roadway projects

State Patrol Budget Office of Traffic Safety Budget
DNRMinnesota Department of Natural Resources

Ways in which funds are distributed to roadway projects

State Park Roads Account Program

26%Buses, Light Rail and Commuter Rail

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Who is responsible for distributing funding to Buses, Light Rail and Commuter Rail?

FEDERAL AGENCIES THAT DISTRIBUTE FUNDING
FTAFederal Transit Administration

Ways in which funds are distributed to bus, light rail and commuter rail projects

Metropolitan Planning (5303) Statewide & Non-Metropolitan Planning (5304) Urbanized Area Formula Grants (5307) New Starts / Small Starts (5309) Mobility of Seniors and Individuals with Disabilities (5310) Formula Grants for Rural Areas (5311) Rural Transit Assistance Program (5311(b)(3)) Intercity Bus Program (5311(f)) Tribal Transit Program (5311(j)) State of Good Repair Grants (5337) Bus & Bus Facilities Program (5339) Bus & Bus Facilities Discretionary Program (5339(b)) Growing State / High Density Program (5340)
U.S. OSTU.S. Office of the Secretary

Ways in which funds are distributed to bus, light rail and commuter rail projects

Transportation Investment Generating Economic Recovery (TIGER) Program
STATE AGENCIES AND BOARDS THAT DISTRIBUTE FUNDING
MnDOTMinnesota Department of Transportation

Ways in which funds are distributed to bus, light rail and commuter rail projects

Greater Minnesota Public Transit Participation Program Intercity Bus Program
Metropolitan Council

Ways in which funds are distributed to bus, light rail and commuter rail projects

Regional Solicitation Annual Budget Metropolitan area transit operations funding formula

2%Airways and Airports

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Who is responsible for distributing funding to Airways and Airports?

FEDERAL AGENCIES THAT DISTRIBUTE FUNDING
U.S. DOT Office of Aviation Analysis

Ways in which funds are distributed to airways and airport projects

Essential Air Service Program
FAAFederal Aviation Administration
STATE AGENCIES AND BOARDS THAT DISTRIBUTE FUNDING
MnDOTMinnesota Department of Transporation
Minnesota Legislature

Ways in which funds are distributed to airways and airport projects

General obligation bonding

1%Waterways and Ports

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Who is responsible for distributing funding to Waterways and Ports?

FEDERAL AGENCIES THAT DISTRIBUTE FUNDING
U.S. Army Corps of Engineers
DOTU.S. Department of Transportation

Ways in which funds are distributed to waterway and port projects

Transportation Investment Generating Economic Recovery (TIGER) Program
STATE AGENCIES AND BOARDS THAT DISTRIBUTE FUNDING
Minnesota Legislature

Ways in which funds are distributed to waterway and port projects

General obligation bonding
MnDOTMinnesota Department of Transportation

Ways in which funds are distributed to waterway and port projects

Port Development Assistance Program

1%Railways and Rail Facilities

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Who is responsible for distributing funding to Railways and Rail Facilities?

FEDERAL AGENCIES THAT DISTRIBUTE FUNDING
Amtrak

Ways in which funds are distributed to railways and rail facility projects

Annual budget
U.S. Congress

Ways in which funds are distributed to railways and rail facility projects

Earmarking
FRAFederal Railroad Administration

Ways in which funds are distributed to railways and rail facility projects

High-Speed Intercity Passenger Rail (HSIPR) Program Consolidated Rail Infrastructure and Safety Improvements Grant Federal-State Partnership for State of Good Repair Grant Restoration and Enhancement Grants
U.S. OSTU.S. Office of the Secretary

Ways in which funds are distributed to railways and rail facility projects

Transportation Investment Generating Economic Recovery (TIGER) Program
FHWAFederal Highway Administration

Ways in which funds are distributed to railways and rail facility projects

Railroad-Highway Grade Crossing Safety Improvement Program
STATE AGENCIES AND BOARDS THAT DISTRIBUTE FUNDING
MnDOTMinnesota Department of Transportation

Ways in which funds are distributed to railways and rail facility projects

Passenger Rail Office work plan Rail Safety Inspection Program MN Rail Service Improvement Program Grade Crossing Account Program Antiquated Grade Crossing Safety Equipment Program
Minnesota Legislature

Ways in which funds are distributed to railways and rail facility projects

General obligation bonding

1%Off-Road Bicycling and Walking Facilities

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Who is responsible for distributing funding to Off-Road Bicycling and Walking Facilities?

FEDERAL AGENCIES THAT DISTRIBUTE FUNDING
FHWAFederal Highway Administration

Ways in which funds are distributed to off-road bicycling and walking facility projects

Recreational Trails program Surface Transportation Block Grant Set-Aside (Transportation Alternatives)
STATE AGENCIES AND BOARDS THAT DISTRIBUTE FUNDING
Metropolitan Council

Ways in which funds are distributed to off-road bicycling and walking facility projects

Metropolitan Parks & Trails Legacy Fund Program Metropolitan Park & Trail Grants
GMRPTCGreater Minnesota Regional Parks and Trails Commission

Ways in which funds are distributed to off-road bicycling and walking facility projects

Greater MN Parks & Trails Legacy Fund Pgoram
DNRDepartment of Natural Resources

Ways in which funds are distributed to off-road bicycling and walking facility projects

Parks & Trails Division budget Regional Trail Grant Program Local Trail Connections Program DNR trail development bonding
MnDOTMinnesota Department of Transportation

How much do you contribute with your vehicle?(state money only)

CALCULATE MY CONTRIBUTION

Your total contribution over 10 years

Year 1: $63
Year 2: $63
Year 3: $63
Year 4: $63
Year 5: $63
Year 6: $63
Year 7: $63
Year 8: $63
Year 9: $63
Year 10: $63

Total contribution after 1 year

$400

Total contribution after 5 years

$1200

Total contribution after 10 years

$5500