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Minnesota faces a bumpy road in trying to fund transportation needs

Transportation Commissioner Charles Zelle is making the case for new investments to improve the system and keep Minnesota economically competitive.

Minnesota has the nation’s fifth-largest highway system, with more than 140,000 miles of state, county and local roads, and more than 20,000 bridges.
Courtesy of MnDOT

State Transportation Commissioner Charles Zelle is hitting the road to talk about — what else? — roads and the need for increased investment in Minnesota’s transportation system.

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Zelle will try to convince Minnesotans not only that the tax dollars they now pay for roads, bridges and transit are being well spent, but that additional resources are needed to improve the system and keep Minnesota economically competitive.

“We don’t have highways and bridges and all these different transportation modes because we love concrete and girders and motor coaches,” he said in an interview last week.  “We have them because these systems support our quality of life, our health, our environment and our businesses.”

Zelle is launching the public outreach and education campaign at the direction of Gov. Mark Dayton. Last session, Dayton declined to support a gasoline tax increase for roads and bridges, apparently feeling that public understanding and support was lacking. As a result, legislators balked at a proposal the DFL governor did support — to increase the metro sales tax for transit.

Minnesota has the nation’s fifth-largest highway system, with more than 140,000 miles of state, county and local roads, and more than 20,000 bridges. It’s an aging system that is costly just to maintain. Fifty percent of the state’s highway pavements are more than 50 years old, and 40 percent of its bridges are more than 40 years old.

In its most recent performance report, the Minnesota Department of Transportation (MnDOT) said more than 14 percent of the state’s bridges were in fair or poor condition, and 6.6 percent of its highway pavements were in poor condition.

fair and poor bridges
Source: MnDOT
More than 14 percent of the state’s bridges were in fair or poor condition.

Meanwhile, transit advocates complain that the Twin Cities lacks adequate, reliable sources of funding to expand the bus system, continue building out the region’s system of rail and bus transitways, and keep pace with transit improvements in other major metro areas.

The need for additional transportation funding was detailed in a 97-page report  completed in December by a transportation finance advisory committee that Dayton had established.

Looking out over the next 20 years, the committee estimated that revenues would fall $21 billion short of what is needed to maintain the performance level of the existing transportation system, and more than $50 billion short of what is needed to build an “economically competitive, world-class system.”

To fill part of the gap, the committee proposed:

  • Increasing the gasoline tax by 10 cents a gallon in the first year and 1.5 cents a gallon in each of the next 19 years, generating $15.2 billion for roads and bridges over 20 years.
  • Raising motor vehicle license fees by 10 percent, raising another $1.1 billion for roads over 20 years.
  • Increasing the current quarter-cent metro sales tax for transit to a half-cent, generating more than $200 million a year for trains and buses.

Some version of this proposal is likely to be offered again once Zelle completes his sales job. He said these are likely to remain the major sources of transportation funding, though the gasoline tax base admittedly is eroding as vehicles become more fuel efficient and electric cars become more prevalent. Meanwhile, the cost of labor and building materials is rising, adding to the funding gap.

Transportation researchers in Minnesota and around the country have studied other revenue-raising options — including congestion pricing, tolling and mileage-based user fees — with the latter being the most promising.

Oregon is the farthest along in developing a mileage-based system. Last month, after extensive studies, the Oregon Legislature passed a law allowing up to 5,000 motorists to volunteer for a demonstration project in which they will pay 1.5 cents for each mile they drive on state roads and receive a refund for the gasoline taxes they now pay at the pump.

Lee Munnich, director of the state and local policy program at the University of Minnesota’s Humphrey Institute and an expert on transportation funding, is following the Oregon experiment closely.  However, Munnich does not believe mileage-based user fees are “ready for prime time” because of political and privacy concerns.

“You look at all of these alternative funding sources and the field narrows pretty quickly,” Munnich said. “The realistic options for the state come down to the gasoline tax for roads and the sales tax for transit.”

Munnich said many people would be surprised to know how little they actually pay in highway user fees.  According to MnDOT, the average Minnesotan drives 15,000 miles a year and gets 21 miles to a gallon of gasoline. At 28.5 cents a gallon, this driver pays $203 a year to use state roads.

In comparison, the typical Minnesotan pays $840 a year for cable television and $852 for cellphone service.

“Motorists should ask themselves, ‘How much is it worth to you to have better roads, smoother roads, fewer bottlenecks?’ ” he said.

Minnesota’s gasoline tax ranks 18th among all states. It was last raised in 2008, after the collapse of the I-35W bridge, as part of a larger transportation funding package (PDF) that also authorized the quarter-cent metro sales tax for transit.

Over the past quarter-century, Minnesota’s governors have provided little leadership on the issue of transportation funding. The 2008 funding increase was enacted over the veto of Republican Gov. Tim Pawlenty.

The state gasoline tax had not been raised since 1988, during the administration of DFL Gov. Rudy Perpich.

Independent Gov. Jesse Ventura actually reduced revenues for roads and bridges, persuading the 2000 Legislature to cap motor vehicle registration fees at $189 for new cars  and at $99 for renewals. (The Legislature repealed those caps in 2008).

Raising transportation taxes could be a political challenge in 2014, when the governor and all 134 members of the Minnesota House will be up for election. Politicians tend to shy away from voting for tax increases when their name is about to appear on the ballot.

The issue also could be complicated by the continuing dispute over the proposed alignment of the Southwest Corridor light-rail transit (LRT) line and the escalating cost of the project.  Once estimated at $1.25 billion, the cost of the 16-mile line between Minneapolis and Eden Prairie is now projected to be $1.6 billion or more.

Annette Meeks, a former chair of the Metropolitan Council’s transportation committee and now head of a conservative research group, said it was clear long ago that “there is no good alignment for that line. It’s beginning to look like one of those cage matches to the death.” The dispute is one that easily could spill over into the Legislature and imperil any proposal for increased transit funding.

For his part, Zelle said, he will “be very explicit about the need” for increased transportation dollars. “Does that mean the Legislature will pass something next year? I sure hope they do. Whether it is next year or the following session is going to be up to the Legislature and the governor to figure out.”

“As part of the administration, I’d say let’s at least have our eyes wide open, understand what is at stake and build as much awareness as possible about how critical transportation is — how we get a really solid economic return on these investments,” he said.