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�'""�DUS� RESEARCF! Short Subjects John Wiiliams ___ _ Updated: November 2005 The Motor Vehicle Sales Tax Transfer: Current Law After a nearly ten-year hiatus, the legi�lature in 2000 again began dedicating arevenues from the z�aotor vehicle sales tax (MVSTj to transportation-related purposes. A constitutional amenc�ment proposed by the legislature in 2005 wo�lc�, if adopted, eventualiy result in 100 percent of MVST revenues going to trans�ortation. Wltat is MYST? The motor vehicle sales tax, or MVST, is the 6,5 percent sales tax applied to the sale of new and used motor vel-�icles. How MVST During the 1980s, the legislat�zre dedicated MVST revenue to highways and transit, revenue used ta be intenc�ing that the maney supplement other spending for t�ose purposes. This dedicated dedication was periodically changed flr suspended, and it was abolished entireiy ' beginnirtg in f scal year 1992. How MYST revenue is now dedicated Begi�ning in fiscal year 2004, tlae l�gisiature restored the MVST transfer to dedicateci taransportatian funds, not ta augm�nt spending but provide tax relief. In 2000, the �egislature put li�nits on license taxes �or passenger caxs. �ince those taxes go to the highway user �ax distribution fund {HUTDF) and are dedicated exciusiveiy to highways, sorne means had to be fou�ad to make up the lass to highway revenue. The legislature made up the losses to dedicated highway funds from reduction of automobile license taxes, and for losses to transit systems af re�enue formerly coming from proper�y taxes. In the 2003 sessiof�, the legislature made anoCher significant c�ange in t�ie �ViVST distribution by increasing the percentage to dedicated transi� funds at the expense of the share for dedicated highway funds. The transit fu�ds' shares were intended not just to replace property tax revenue but also to make up for budget cuts in general fund appropriations for transit assistance. This allocation is intendec� to be in effect through fiscal year 2�p7. The distribution of MVST rev�nue is now as follows: • 30 percent to HUTDF, th� fund dedica��d exclusively ta state and local highways. By constitu#ional dedication this money is further divided among the state trunk higllway fund, the county state-aid highway fiind, and the municipal state�aid street f�.�nd. . 0.65 percent directly ta the county state-aid higl�way fi�z�d, in additian to its share of the 30 percent abave • 0.17 percent directly to the municipal state-aid street iund, in addition to its sl�are of the 3Q percent above • 2l .5 percent to the Metropolitan Council to replace revenue last when the