HF268

Purpose

• Establish rules governing how interest and investment income from transportation-related funds are used.
• Clarify who manages investments for state-aid funds and how earnings are credited.

Main provisions

• Investment of state-aid funds (amendment to Minnesota Statutes 2024 section 162.16):
  • The State Board of Investment must invest money in the county state-aid highway fund and the municipal state-aid street fund in securities allowed for such investments.
  • All interest and profits from these investments must be credited to the fund that earns them.
  • The Commissioner of Management and Budget is designated as the custodian of all securities purchased under this section.
• Use of local investment earnings (new subdivision):
  • For purposes of this subdivision, a “transportation revenue source” includes money provided to local units of government under various state programs and sections, including grants, loans, or other financial assistance for transportation projects or programs, and revenue from transportation-related taxes and fees, as well as reserves and debt instruments secured by a transportation source.
  • A local unit of government must use the interest or other investment earnings from a transportation revenue source only for transportation purposes.

Definitions and scope

• Transportation revenue source: broad category that covers funds from state grants, loans, or other financial assistance to local governments for transportation, as well as revenue from transportation-related taxes and fees, and reserves or debt obligations tied to such sources.
• Exclusions: mentions certain filing fees (e.g., under specific sections) that are not included in this definition.

Significant changes to existing law

• Shifts and clarifies the management of investment income:
  • Specifies that investment earnings belong to the respective transportation funds and must be used for transportation purposes only.
  • Elevates the State Board of Investment’s role in investing state-aid funds and designates the Commissioner of Management and Budget as custodian of the securities.
• Expands the scope of what counts as a transportation revenue source, explicitly including a wide range of state-provided funds, reserves, and debt instruments, with a clear mandate that earnings from these sources be used only for transportation needs.

Practical impact

• Local governments must budget and apply earnings from transportation investments strictly to transportation-related uses.
• The bill creates a clearer separation of how investment income is credited and spent, potentially limiting non-transportation uses of earnings and affecting transportation project financing.

Relevant terms - State Board of Investment - Commissioner of Management and Budget - state-aid funds - county state-aid highway fund - municipal state-aid street fund - investment income / interest - transportation revenue source - grants, loans, and other financial assistance - transportation-related taxes and fees - reserves - certificates of indebtedness / notes / debt secured by a source - custodian of securities