Regional Transportation Sales and Use Tax

In the 2023 session, the Minnesota Legislature passed a new sustainable revenue source for region’s transportation system. This ¾-cent regional transportation sales tax goes into effect in October 2023. These funds will be split between the region’s counties (17%) and the Met Council (83%). The Met Council share will primarily go toward transit operations, maintenance, and capital projects, with 5% focused on active transportation like walking and biking.

The Minnesota Department of Revenue will collect and administer the sales tax on behalf of the Met Council (PDF).

Transportation Sales Tax Report

The Metropolitan Council, as designated in state law, administers a ¾-cent regional transportation sales and use tax for transit and active transportation. The sales tax took effect on Oct. 1, 2023. Each year, the Met Council will report on the revenue collected, anticipated (forecasted) revenue, and how the money was spent, with the active transportation expenditures specifically called out. The report is called for in 2023 Minnesota Session Law, Chapter 68.

The Met Council receives 83% of the revenue; the remaining 17% is distributed to the seven metro-area counties. Of the 83%, 5% is set aside for active transportation and 95% to transit operations, maintenance, and capital projects. State law requires use of the sales tax for transitway operating and capital maintenance investments. Other uses outlined in legislation include improvements to regular route bus service levels, transit safety, accessibility, and new and replacement shelters.

Estimated sales tax revenue

The Minnesota Department of Revenue estimates the sales tax will provide a significant addition to regional transit funding, estimated at:

• Calendar year 2024 – $433 million
• Calendar year 2025 – $473 million 
• Calendar year 2026 – $487 million

Allocating funding

The Met Council will use much of those revenues to fund and expand the transit system, including planned investments and service expansion, adding personnel to operate and monitor the system for safety, and replace an aging fleet and facilities.

Some funds will replace money the Met Council previously received from counties for transitway operating costs. Under the new legislation the Met Council assumes 100% of transitway operating costs; taking on additional costs of about $9.6 million in 2023 and $49 million in 2024. 

The legislation also clarifies that the Met Council is responsible for all capital maintenance costs; costs that had not been designated previously and did not have an adequate funding source.

Sales tax revenues will be applied to current maintenance and operational needs, as well as investments in a dynamic transit system of the future, meeting the needs of people and businesses in the region.

A significant portion of the sales tax revenues will eliminate a structural operating deficit for the agency.

Legislative stipulations

In addition, the legislation specifically directs the funds to enhance, maintain, and improve transit services in the following areas.

• Expand levels of regular route bus service
• Enhance transit safety, adding personnel to address customer needs
• Improve maintenance at transit stops and centers
• Improve and replace transit shelters
• Expand and maintain bus rapid transit corridors
• Invest in zero-emission buses
• Invest in microtransit service that is on-demand, shared-ride, and smaller in scale than fixed route service
• Invest in Metro Transit employee wages

The legislation gives counties latitude in allocating their 17% of the sales tax within prescribed parameters. In addition to walking, biking, and roadway maintenance projects, up to 17% of the counties’ share may be spent on transit.