Subd. 1. Distribution of five percent.

Pursuant to article 14, section 5, of the constitution, five percent of the net highway user tax distribution fund is set aside, and apportioned to the county state-aid highway fund.

1. (1) 30.5 percent to the town road account created in section 162.081;
2. (2) 16 percent to the town bridge account, which is created in the state treasury; and
3. (3) 53.5 percent to the flexible highway account created in subdivision 3.

That apportionment is further distributed as follows:

Subd. 2. Investment.

Upon the request of the commissioner, money in the highway user tax distribution fund shall be invested by the state board of investment in those securities authorized for that purpose in section 11A.21. All interest and profits from the investments must be credited to the highway user tax distribution fund. The state treasurer shall be the custodian of all securities purchased under this section.

Subd. 3. Flexible highway account; turnback accounts.

1. (a) The flexible highway account is created in the state treasury. Money in the account may be used either for the restoration of former trunk highways that have reverted to counties or to statutory or home rule charter cities or for regular trunk highway purposes.
2. (b) For purposes of this subdivision, "restoration" means the level of effort required to improve the route that will be turned back to an acceptable condition as determined by agreement made between the commissioner and the county or city before the route is turned back.
3. (c) The commissioner shall review the need for funds to restore highways that have been or will be turned back and the need for funds for the trunk highway system. The commissioner shall determine, on a biennial basis, the percentage of this flexible account to be used for county turnbacks, for municipal turnbacks, and for regular trunk highway projects. The commissioner shall make this determination only after meeting and holding discussions with committees selected by the statewide associations of both county commissioners and municipal officials.
4. (d) Money that will be used for the restoration of trunk highways that have reverted or that will revert to cities must be deposited in the municipal turnback account, which is created in the state treasury.
5. (e) Money that will be used for the restoration of trunk highways that have reverted or that will revert to counties must be deposited in the county turnback account, which is created in the state treasury.
6. (f) As part of each biennial budget submission to the legislature, the commissioner shall describe how the money in the flexible highway account will be apportioned among the county turnback account, the municipal turnback account, and the trunk highway fund.

7. (g) Money apportioned from the flexible highway account to the trunk highway fund must be used for state road construction and engineering costs.

   * NOTE: The amendment to subdivision 1 and the addition of *subdivision 3 by Laws 1998, chapter 372, article 2, sections 1 *and 2, are effective July 1, 1999. Laws 1998, chapter 372, *article 2, section 9.