With one modest proposal, Gov. Mark Dayton may have put the Twin Cities on a fast track to build out its transit system.
In his budget, presented the other day to the Legislature, was a 0.25 percent tax on sales in the seven-county metropolitan area that would provide a permanent stream of money to expand LRT construction, add bus rapid transit lines and make up transit operating deficits.
“To have the governor state that transit is part of his vision for the growth of the region in the 21st century and then to have him back that up with resources, well, it’s a great way to start off a legislative session,” says Peter McLaughlin, Hennepin County Commissioner and long-time public-transit advocate. “I’m incredibly appreciative of what the governor has done.”
Transportation chairs in both the state House and Senate — Rep. Frank Hornstein (DFL-Minneapolis) and Scott Dibble (DFL-Minneapolis) — endorsed the tax enthusiastically in a joint press release. “It’s highly unusual to have a significant tax increase proposed by a governor to benefit mass transit,” Hornstein later told me in a phone call.
Through the years the metro’s transit program has progressed in fits and starts worthy of the Toonerville Trolley. The Legislature took 15 years to cough up its share of money for the Hiawatha Line, which launched in 2004. The next phase — the Central Corridor LRT connecting St. Paul and Minneapolis — won’t start operating until 2014. Last year, the governor asked for $25 million in bonding for the Southwest Corridor line to Eden Prairie, but the project received only $7 million, $2 million of it from an economic development fund GOP legislators set aside after scaling back the governor’s 2012 bonding request.
While transit efforts have limped along, construction costs have soared and the federal government lowered the share of money it contributes to transit projects from 80 percent to a maximum of 50 percent. And the more the local government asks for, the less likely it is to receive dough from the Feds who want to see some expression of local effort.
In fact, to show that they were earnest about public transit, five metropolitan counties (Anoka, Dakota, Hennepin, Ramsey and Washington) back in 2008 imposed a 0.25 percent sales tax on themselves. (Carver and Scott Counties opted out.) If the Legislature adopts Dayton’s proposal, the amount devoted to transit would nearly double.
Tallying the money
The tax already in place brings in about $101 million a year. The governor’s add-on would presumably yield another $101 million plus an estimated $5 million from Carver and Scott. After that, things get complicated. Dayton has also asked for a sales tax reform that would broaden it to include clothing as well as service businesses. Those changes could add as much as 70 percent to those revenues, says Andrew Lee, fiscal adviser to the House Transportation Committee. But Dayton is also hoping to lower the rate. Bottom line: the Met Council is projecting a $250 million annual kitty for transit.
That would be enough to provide an annual expansion of bus service (more routes, greater frequency and longer hours), fund the local portion of the cost of the Southwest LRT, add as many as 12 arterial bus rapid-transit or streetcar lines over the next 20 years, and eventually build the Bottineau LRT, which would stretch northwest of Minneapolis to Brooklyn Center, and the Gateway LRT, which would extend east of St. Paul into Washington County.
In short, the metro would have a fully developed public transit system. That would be a boon to both commuters and businesses, according to the Itasca Project, an alliance of area employers, including Best Buy, HealthPartners, SUPERVALU, U.S. Bank, Wells Fargo and others. A 2012 study it commissioned found that a $4.4 billion investment in transit over the next 18 years would produce a direct return of between $6.6 billion and $10.1 billion. (Direct returns include lower vehicle operating costs, lower shipping and logistics costs, decreased emissions and so on.) Transit construction would create an estimated 30,000 equivalent full-time jobs, and development near stations would add another $2 billion to $4 billion in economic development.
Building the system more rapidly ups the return on investment dramatically to as much as $16.5 billion, and since the governor is a member of the Itasca Project, it’s a good bet that he took note of its findings. His proposal also falls in line with a recent poll that found Minnesota voters overwhelmingly in favor of expanding public transit. Some 79 percent of those surveyed said they believe an expanded public transportation program would benefit the state. Fully 57 percent of voters in the seven-county metro say that they would approve of a 0.5 percent sales tax to fund transit; 74 percent of those outside the metro approve of the tax.
Not everybody is thrilled with the idea, however. Rep. Michael Beard (R-Shakopee), a member of the Transportation Policy Committee and long a critic of public transit, disapproves because the state has to ante up subsidies for transit every year from the state’s general fund. When drawn to the fact that the tax would, in theory at least, take care of operating losses, he sounded less disgruntled but added that he could support such a tax only if counties or other local governments could use the money as they wished to fund their own projects.
‘We don’t like any kind of tax’
Randy Maluchnik, commissioner of Carver County, sounded somewhat resigned. “In Carver, we don’t like any kind of tax,” he says. Nevertheless, he is convinced that the LRT is coming to Eden Prairie sooner or later — “it’s a matter of time,” he adds.
But if the tax is adopted by the Legislature, he would like a piece of the funds collected from his county to go to items it needs. Some money, he says, should go to the area’s so-called opt-out bus system. Taxpayers don’t want to abandon it because they’ve already paid for it, he says, but those buses “will become feeders to the LRT line,” and Carver would need funds to add service and build park-and-ride facilities.
Further opposition comes from those who believe that the transit tax neglects the needs of rural Minnesota. “We have more of a shortfall for roads and bridges,” says state Sen. John Pederson (R-St. Cloud), referring to a brand-new report on Minnesota’s “transportation challenges” that came out only this week from TRIP, a Washington, D.C., nonprofit research group. They found, not too surprisingly, that “a third of the state’s major roads are in need of repair, with 12 percent rated in poor condition and an additional 19 percent rated mediocre in 2010.”
You have to take those findings with a grain of salt since TRIP is sponsored by insurance companies, equipment manufacturers, labor unions and others looking to boost construction, but their assessment doesn’t seem out of line with those done previously.
Given all that, maybe the 0.25 percent add-on should apply statewide, with funds from Greater Minnesota going to repair roads and bridges and those collected in the seven-county area designated for transit. And businesses in the seven-county area wouldn’t have to worry about customers driving over the county line to competitors to avoid the tax. The House Transportation Committee, says Hornstein, will probably look at that idea among many others.
“The governor has made an opening proposal, but it’s by no means the final word,” he says. Between now and the end of the session, he adds, “A lot of things can happen.”