Gov. Mark Dayton’s ambitious plan for Twin Cities transit development has drawn strong support from business groups, legislative leaders, local officials and editorialists. But the reaction to his bonding proposal this week, which omits state-level funding for the Southwest light rail line, has been more mixed.
“I still believe there should be a state partnership,” Rep. Alice Hausman, who heads the House Capital Investment Committee, told the Star Tribune.
So does Minnesota 2020. The governor is relying on an increased transit sales tax in the seven Twin Cities counties to pick up the slack, still $118 million short of a $125 million contribution expected from the state for the $1.25 billion rail link from Eden Prairie to Minneapolis.
Some cash flow was shifted
After much wrangling, similar 10 percent shares for construction of the Hiawatha, Central and Northstar rail lines were appropriated via state bonding by divided legislatures. The 0.25 percent metro sales tax enacted in 2008 over former Gov. Tim Pawlenty’s veto was earmarked solely for local shares of transit development, but some of that cash flow was later shifted to plug operating deficits.
That, of course, has weakened the region’s ability to compete with peer cities such as Dallas, Denver and Seattle that already boast of comprehensive rail transit systems. Dayton’s plan could do even more damage, particularly if his regional sales tax proposal doesn’t survive the legislative session. Despite a recent endorsement from the Minneapolis Regional Chamber of Commerce, its passage is anything but assured, Hausman noted.
Good arguments can be made for both forms of transit funding.
Long-term borrowing is a time-tested way to finance infrastructure that will last for many decades. Debt service comes from a mix of statewide taxes that, taken together, are less regressive than pay-as-you-go sales taxes alone, which hit hardest on those of low incomes.
And because the Twin Cities are Minnesota’s chief economic engine and a frequent destination for people from all over the state, all Minnesotans have an interest in a thriving metro served by 21st century transportation improvements.
Higher transit sales taxes in competitor cities
On the other hand, transit sales taxes as much as four times greater than the Twin Cities’ current levy have sparked rail development in many competitor U.S. cities. The money comes mainly from residents near where the rails are laid, while visitors contribute roughly in proportion to their use of the system. And a higher transit tax — 0.75 percent in five counties, 0.50 percent in exurban Scott and Carver counties under Dayton’s proposal — would be pretty permanent, reducing the uncertainty of recurring legislative battles over bonding for system expansion.
For an example of that, we need look back only to last year, when a conservative-dominated Legislature zeroed out Dayton’s $25 million bonding request for the Southwest LRT. He kept the project on track only with $2 million from his discretionary borrowing fund.
Dayton’s plan for “A 21st Century Transit System” calls for building up to 21 new metro bus and rail transitways over the next 20 years, as well as fully funding their deficit-riddled operations and expanding traditional bus services. It’s a tall order for a region that has lagged its peers and needs to play serious catch-up.
Multiple sources needed
It will only be harder to achieve if we abandon one of the multiple funding sources — local, county, metro, state and federal — that have worked in the past. Both a stronger transit sales tax and continued state capital investment, perhaps with negotiated adjustments to past practice, comprise a sustainable strategy.
When it comes to transit support, we need a belt and suspenders.
Conrad deFiebre is a Transportation Fellow at Minnesota 2020, a progressive, nonpartisan think tank based in St. Paul. This commentary originally appeared on its website.
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