State transportation deal trims transit aid, slows highway fund transfer and raises EV surcharge

Amber Backus, MICA’s transportation representative affiliated with United Strategies, briefed the county on the main transport outcomes from the 2025 session and special session on June 17.

Backus told commissioners that Greater Minnesota transit lost $22 million in general‑fund support for the upcoming biennium and that Metro Transit faces a larger cut (about $64 million) but has broader dedicated revenue sources. She said the legislature also scaled back the scheduled transfer of motor‑vehicle sales tax revenue into the trunk‑highway fund — reducing the rate phased in over several years — and that lawmakers raised the electric vehicle surcharge to help offset trunk‑highway revenue losses. “To have a $115 million target on the biennium was really tough to reach,” Backus said, describing how transportation bore a disproportionate share of general‑fund reductions.

Why it matters: counties rely on trunk‑highway fund distributions (state aid) and on CASA/CASA‑like formulas for local road funding. Backus said the slower sales‑tax transfer creates a hole in the trunk‑highway fund that was partly offset by increases to EV surcharges; the EV surcharge changes are expected to raise roughly $23 million in 2026–27 and $53 million in 2028–29, tied to vehicle MSRP.

Details and local effects: Backus said the trunk‑highway transfer was scaled back from an intended 43.5% share toward lower percentages over several years (43% next year, then gradually down to 30% by fiscal year 2029 before phasing back up). That reduces available state trunk‑highway revenue and requires adjustments to county allocations in later years. Backus said the local government road wetland replacement program received $3 million in the transportation bill to replenish mitigation credits and that CASA (County State Aid) still shows modest increases in the immediate biennium but larger cuts later if the transfer remains reduced.

Questions and follow up: Commissioners asked whether Crow Wing’s combination transit service with Brainerd would be affected; Backus said Greater Minnesota transit received the $22 million cut and that she would follow up with county‑level distribution details. She recommended county engineers remain engaged on greenhouse‑gas mitigation rules and state aid road standards that were discussed but largely removed from the final bill.

Backus said MICA helped block several policy changes counties opposed (for example, proposed mandatory state speed‑setting for county roads and a new MnDOT‑administered program to compensate businesses for construction disruption were dropped).