A number of tools are available to help facilitate the implementation of health and planning initiatives. Implementation of policies, programs, and facilities can be funded through a number of traditional public financing tools, as well as innovative approaches specifically tailored to health issues. Taxes, impact and user fees, bonding, special assessments and special districts, and grants from governmental and non-governmental organizations are all available to help communities pursue healthy communities. This page provides a list of funding sources that communities can use to help incorporate health into planning through the implementation process. The page is broken down by local, state, federal, and private sources of funding
- Property Tax
Property taxes are a primary source of local revenue in the United States. Their primary function is to fund services that are administered at the most local levels of government, such as street maintenance and public-transit operations.
- General Sales Tax
As of 2008, the State of Minnesota has a 6.5 percent general sales tax; local municipalities can initiate a local sales tax beyond that state tax rate to raise funds for infrastructure and capital improvement projects.
- Selective Sales Tax
Taxes placed on select items (e.g., gas, alcohol, tobacco, public utilities, lodging) can be used to enhance local budgets. For example:
- Local taxes on motor-vehicle fuels, such as gasoline, are authorized in fifteen states, and have been adopted in ten. In states where they are in use, the funds support the operating budgets of county-road departments, much like state gasoline taxes that are passed down to the local level in other states. In Alabama and New Mexico, revenues from local gasoline taxes are often used for non-transportation purposes, such as education or health care. In most states, local gasoline taxes have not been adopted at high enough levels to fund major new capital investments.
- Real estate transfer taxes (RETTs) (also known as “real property transfer taxes”) are state, county, and/or municipal sales taxes most often used as general revenue. However, RETTs, can be devoted to specific uses such as affordable-housing development or open-space protection. See PolicyLink for more information.
- Individual Income Tax
Some municipalities have adopted payroll taxes (or income/payroll combinations) to enhance local budgets.
- Vehicle License Tax
A wide range of taxes on motor vehicles are used to fund local investments. The most important varieties are license or registration taxes, which tend to be either flat fees based on vehicle type, or variable taxes based on a vehicle’s value. Thirty-three states authorize some form of local vehicle taxes. Many of the states allow these taxes to be used as a general revenue source. As with local-option gasoline taxes, these taxes typically fund pay-as-you-go programs of routine maintenance and operations.
- Tax increment financing
Tax increment financing (TIF) is a method of financing real-estate development of property that is otherwise too costly to develop for a variety of reasons. The use of TIF relies on an increase in real-property taxes over the base rate, generated within a designated area. The local government determines the property-tax revenue it is collecting in the given area before redevelopment occurs. Then they borrow money, with loans or by the sale of bonds. The borrowed funds are used in various ways to improve the development prospects of the area: loans to new businesses, capital improvements, redevelopment of contaminated sites, new services such as improved street cleaning and security patrols, advertising and marketing, and incentives to developers. As development occurs in the area, tax revenue increases, and the excess above pre-redevelopment property tax revenue in the area is used to pay off the loans or bonds and to finance further redevelopment activities. TIF has traditionally been used as a means of redeveloping blighted urban areas. Its use has spread to other purposes. TIF in Minnesota is generally used to:
- redevelop areas occupied with substandard buildings;
- build housing for low- and moderate-income families;
- clean up pollution;
- provide general economic development incentives; and
- finance public infrastructure, such as streets, sewer, water, sidewalks, and similar improvements. (This is not an explicit purpose of TIF, but Minnesota cities frequently use it for this purpose.)
- For more information please visit the State of Minnesota’s Tax Increment Financing (TIF) page:
- Property Tax
- Impact Fees and Exactions
Impact fees and exactions are charges or dedications collected on a one-time basis as a condition of an approval being granted by the local government. The purpose of the fee or exaction must directly relate to the need created by the development. In addition, the amount of the exaction or fee must be proportional to the cost of improvement.
- Impact fees are charged to developers and collected to pay for the construction or expansion of off-site capital improvements that are necessitated by and benefit the new development (i.e., public facilities and services such as parks, schools, sewers, water, transportation, and public safety).
- An exaction is when a government requires that a landowner dedicate land or property interest, such as an easement, as a condition for granting a development permit.
- User Fees
User fees are used to help pay for a variety of public services and facilities, such as entrances into state parks, tolls on highways, entrance fees for swimming pools, and meters for parking.
- Many cities, for example, have funded water-resource management programs with their own financial resources. Cities can fund such programs in a variety of ways: property taxes, special assessments, development fees, land exaction in lieu of fees, and user charges. In recent years many cities have created stormwater utilities, which allow individual property owners to be charged for stormwater management in direct proportion to the volume of stormwater leaving the property and also the quantity of pollutants in the runoff.
- General Obligation Bonds
General obligation bonds are sold by local governments to fund general expenditures or specific capital improvement or facilities projects. They are typically used for expenditures or projects that benefit the entire community. The full taxing power of jurisdiction is pledged to retire the debt incurred when the bond is sold. The bonds may be subject to municipal debt limits and may require a public-referendum vote.
- Revenue Bonds
Revenue bonds are sold by local governments to finance revenue-producing improvement projects (e.g., municipal parking ramp, swimming pool). The bonds are repaid using the revenue generated by the facility over time.
- Special Assessments
Special assessments are used to fund projects or services that benefit specific properties, such as paving a neighborhood street or extending the sanitary sewer. Property owners are required to pay the cost through a tax assessment.
- Special Service Areas or Districts
Cities can use a special-service-area designation as a way to raise cash to finance extra services, improvements, or facilities that will benefit the targeted area. Projects commonly include security, storefront rehabilitation, advertising and promotion, and business retention or attraction efforts; some communities have used this tool to finance infrastructure upgrades at industrial parks. Property owners in a defined brownfield area could use this approach to raise funds to cover cleanup costs. In establishing a special service area, property owners in the proposed district agree that a real-estate levy or special fee be imposed in the defined area that will benefit from the proposed services or activities. The jurisdiction uses this additional revenue to finance the improvements, either earmarking it directly to the area, or using it to issue bonds to fund area projects.
- Business Improvement District (BID)
BIDs are special service areas or districts in cities defined by state and local legislation in which, the private sector delivers services for revitalization beyond what the local government can reasonably be expected to provide. The properties and/or businesses within this legally-constituted district pay a special tax or assessment to cover the cost of providing facilities or services for which the district has a particular need, such as sidewalk construction, security services, or lighting improvements. The BID, while facilitated by the local government, provides flexibility for individual business districts to control the assessment and expenditure of funds that provide direct benefits to them.
- Business Improvement District (BID)
- Livable Communities Grant Program
This program is a voluntary, incentive-based approach to help the Twin Cities metropolitan area address affordable and lifecycle housing needs, while providing funds to communities to assist them in carrying out their development plans. Livable Communities funds can be used for a range of activities including environmental cleanup, job and housing development, affordable housing, and efficient use of land and infrastructure.
- Regional Solicitation of Federal Transportation Projects
The regional solicitation process selects projects and programs to receive federal funds from the Surface Transportation Program (STP), Congestion Mitigation/Air Quality Improvement Program (CMAQ), Transportation Enhancements program (TEP), and Bridge Improvement or Replacement Program (BIR) of Title I of the Safe Accountable Flexible Efficient Transportation Equity Act – A Legacy for Users (SAFETEA-LU).
- Watershed Districts: There are several watershed districts in the Twin Cities Metro area, which have varied grant funding and educational opportunities available.
- Soil and Water Conservation Districts
Soil and water conservation districts (SWCDs) are political subdivisions of the State that work to reduce non-point sources of pollution. They provide technology, funding and educational services in each community.
- Minnesota Pollution Control Agency (PCA)
- Minnesota Department of Transportation (Mn/DOT)
- Minnesota Department of Natural Resources (DNR)
- Greater Minnesota Housing Fund (GMHF)
- Minnesota Department of Employment and Economic Development (DEED)
- U.S. Department of Transportation (DOT)
- U.S. Environmental Protection Agency (US EPA)
- Housing and Urban Development (HUD)