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HomeMy WebLinkAbout5.I. Constitutional Dedication of Motor Vehicle Sales Tax-Res. No. 6379 S, I. CITY OF SHAKO PEE Memorandum CO~'~~r:'1T TO: Mayor and City Council " ~I~~~' FROM: Mark McNeill, City Administrator SUBJECT: Constitutional Dedication of Motor Vehicle Sales Tax DATE: February 16, 2006 INTRODUCTION: The Council is asked to adopt a resolution which would support the constitutional dedication of the Motor Vehicle Sales Tax (MVST) to transportation-related projects.. BACKGROUND: Attached is a letter dated February 10th from the Association of Metropolitan Municipalities to Mayor Schmitt, describing the support being sought for the passage of a constitutional dedication ofMVST. It describes how monies which had been intended to be used for transportation have been diverted over the years to meet general State funding shortfalls. Last year, the Legislature allowed this issue to be put the voters, which will happen in November of this year. The letter further describes concerns which will be raised over passage - that people will perceive that this will provide all funding necessary to address the transportation shortfall (in reality, it is only about 30% of total needs); that there is no set amount dedicated to roadway construction, and finally, that this will create a larger shortfall in the General Fund (in reality, if passed this will be phased in over five years). However, none of these are issues that can't be addressed, and the $300 million raised will be a significant step towards solving the shortfall in the State's transportation funding. The AMM has asked its member cities to pass the attached resolution. Those resolutions will be collected, and will used to demonstrate city support of the passage of the MVST amendment. VISIONING RELATIONSHIP: Addressing the transportation funding shortfall in the metropolitan area impacts Shakopee, and will contribute to Goal B: High Quality of Life. RECOMMENDATION: I recommend that the attached resolution be adopted. ACTION REQUIRED: If the Council concurs, it should, by motion, adopt the following resolution: Resolution No. 6379 A Resolution Supporting the Constitutional Amer.zdment for Motor Vehicle Sales Tax Dedication to Transportation ~JL~V& Mark McNeill City Administrator I RESOLUTION NO. 6379 A RESOLUTION SUPPORTING}HE CONSTITUTIONAL AMENDMENT FOR MOTOR VEHICLESAL~S TAX DEDICATION TO TRANSPORTATION WHEREAS, Minnesota's transportation infrastructure forms the backbone of the State's economy and has a direct impact on future economic development; and WHEREAS, funding for highway and transit systems in Minnesota has remained stagnant and is failing to keep pace with its growing population and growing demands; and WHEREAS, local governments throughout the State struggle to maintain local transportation systems while the State's gas tax has not been increased since 1988 and transit budgets have been cut in recent years;. and WHEREAS, the Minnesota Legislature has repeatedly turned to revenue from the motor vehicle sales tax, which has been viewed as user fee revenue, in order to fund highway and transit systems including the current dedication of 54% of motor vehicle sales tax for transportation purposes; and WHEREAS, the Legislaturepassed a proposed constitutional amendment during the 2005 Legislative Session that would appear on the November 7,2006 ballot asking voters if the remaining 46% of motor vehicle sales tax revenue currently used for other purposes should be used for highways and transit systems; and WHEREAS, passage ofthis amendment would mean an increase in more stable revenue for highway and transit systems throughout the State and would raise approximately $300 million per year once the transfer of revenue is fully phased in by 2011. NOW, THEREFORE, BE IT RESOLVED, that the City of Shako pee strongly supports passage of the proposed amendment to the Minnesota Constitution dedicating all of the motor vehicle sales tax revenue to transportation with at least 40% of the revenue for public transit assistance and not more than 60% of the revenue for highway purposes. Adopted in adj. regular session of the City Council of the City of Shako pee, Minnesota, held this 21 st day of February, 2006. Mayor of the City of Shakopee ATTEST: City Clerk - AUQciationof Metropolitan .. Municipalitie.s In2005,the legislature passed a proposedconstitutianal amendment that would dedicate 100% of the existing motor vehiCle sales tax (MVST)to the highway user.. tax distribution fund. Previous legislation has already dedicated this money to ... highway and transit fundingunder state statute, but as a result of budgetshortfalls preceding administrations have used the money to balance the budget. Placing the motor vehicle sales tafC in the highway user fund through a constitutional amendment wbuld ensurededicatian of the funds. The current proposed amendment, which is enclosed, would take at least 40 percent of the revenue generated by theexistingmotar vehicle sales tax anddedicate.it to transit statewide, and would dedicate no mare than 60 percent of the funds towards highways statewide. The conversian of money from the general fund, where it had . previausly been rerouted, will tal<:e placeover five years being fully phased in by 2011. There are three issues thatl1ave made the Constitutionaldedicatian controversiaL First, the amendment language does not guaranteeafixed aniaunt forroads. Second~ there is concern that the public will consider the problem to be "fixed" if they vote for the amendment, when we lmow that the MVST amendment will only provide about 25% of the funding necessary to. maintain our current level of congestioll~. And. finally, the dedicatian af MVBT to. transportation financing will create aholein the general fund. Critics cansider these issues to be fatal flaws and are campaigning against the amendment as it is written. .. . . ... . None of these issues, either singularly orincombinatian issuffi.cientreason to oppose the amendment. While critics argue that roads win beleft aut, eacl~bienniuin ' proceeds from MVST must be legislatively appropriated for roads and transit Highwayfundinghas.a very strong constituency in the legislature and road construction will get its fairshare.While it's also true that MVST will only provide a portion of the necessary transporiationfunding, ($300 million in additional funds compared to a $1 billion need), it represents an important first step toward additional funding.-,Andfinally, while dedicating MVSTto transportation may.leave.a shortfall in the general fund, MVSTis a transportation related tax that should be dedicated to transportation useS. The AMM has taken a position, through its transportation policy committee and board of directors, of supporting the proposed constitutional amendment as it is currently drafted. !tis acknowledged by transportation advocates and municipalities alike that the current draft of the proposed amendment could have been done differently, however drastic changes to the language at this late stage undermine the ultimate passage - of the amendment. The AMM is aware of attempts toehange the current language of the amendment and/or defeat the current amendment as it is proposed. - The AMM is encouraging individual cities topass resolutions supporting the passage of the constitutional amendment. Funding for highways and transit is increasingly more difficult to secure and a dedicated more stable source of funding must be sought. . I Enclosed is a sample resolution that can be used as a starting point for individual city resolutions. We are encouraging cities to pass the resolutions, return an adopted copy and the resolutions will be used in AMM's legislative campaign to show legislators that cities support the passage ofthe.MVST amendment. If there are any. questions or concerns please feel tocontacteither Sarah Erickso:n at 651-21S-4003 sarah@amm145.org or Louis Jamboisat 651-215..400110uis@amm145.orgformore information. "..u. C.c. City Administrator/Managers .~