Cities, MnDOT and lawmakers debate shifting local cost participation for trunk-highway projects

House File 192, carried by Representative John Burkel, drew testimony from mayors, city engineers and MnDOT officials on the proposal to remove or reduce local cost-participation requirements for trunk-highway projects and have the Minnesota Department of Transportation (MnDOT) cover those costs.

Representative Burkel described the bill’s intent as a response to what he and multiple municipal testifiers called an unsustainable burden on local governments when MnDOT projects require local utility relocations, sidewalk/trail work, or other cost participation. The committee laid the bill over for further work; no final action was taken.

Small and large cities described concrete fiscal impacts. Dan Fabian, mayor of Roseau, told the committee his city’s local share estimates had fluctuated from roughly $400,000 down to $185,000 after a MnDOT pilot, then rose again to about $255,000; he said other small cities faced local shares in the millions. Mary Supple, mayor of Richfield speaking for the League of Minnesota Cities, said Richfield spent 66 percent (about $17.9 million) of its municipal state aid (MSA) from 2003–2023 on projects to rebuild or rehabilitate roads the city does not own, leaving only about 12 percent for local MSA street maintenance in that 20-year period.

Brooklyn Center Mayor April Graves and a Brooklyn Park official described early estimates for the Highway 252/I-94 project that would require local agencies to pay tens of millions for local cost participation under current MnDOT policy, potentially exceeding typical annual local spending on streets by multiples. Justin Femright, public works director for Elk River and a past City Engineers Association executive committee member, said roughly 20 percent of statewide state-aid dollars intended for city infrastructure are being used to meet local cost participation obligations. He urged legislative relief.

Philip Schaffner, Director of MnDOT’s Office of Transportation System Management, described an ongoing MnDOT cost-participation policy update and pilots aimed at lowering burdens on non-state-aid and smaller cities. He warned the committee that if MnDOT were required to fund a much larger share of local costs without additional state funding, "MnDOT covering a greater share of those costs or all of those costs will mean that we will have to deliver fewer projects than are currently programmed unless there is also an increase in the state road construction funding to offset those local contributions." Schaffner said he expects a revised MnDOT policy to be ready in late 2025 or early 2026 after deliberative stakeholder work.

The committee received a fiscal note summary from Mr. Lee that estimated potential costs to the state: roughly $25 million per year from the general fund (for items trunk highway funds cannot pay, such as utility relocations), about $50 million per year from the trunk highway fund, and two additional FTEs for MnDOT administration, with MnDOT caveats about forecasting local utility costs.

Committee members sought compromise language and welcomed ongoing MnDOT work groups; Representative Cagle said she wanted to avoid removing local "skin in the game" entirely and asked to work with the bill author. Representative Jones and others encouraged continued collaboration with cities and MnDOT’s work group.

What’s next: The bill was laid over for further negotiation as MnDOT completes its policy update and as legislators weigh funding tradeoffs and statutory changes.