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Dayton goes big with transportation plan

On Monday, Dayton offered up details of his plan, which would invest $11 billion on roads, bridges and transit in Minnesota over the next decade. 

Gov. Dayton's plan would raise about $6 billion for roads and bridges over the next decade via a 6.5 percent sales tax on gasoline at the wholesale level and an increase in fees for vehicle registration and license tabs.
MinnPost photo by Briana Bierschbach

On his 68th birthday, Gov. Mark Dayton asked the Minnesota Legislature for an expensive present: nearly $11 billion in new investments in roads, bridges and transit across the state over the next decade.

The aligning of the Democratic governor’s birthday and the rollout of his transportation funding plan on Monday was just a coincidence, but in many ways a transportation fix is the governor’s biggest want from legislators for his second term in office. He’s been talking about it since he hit the campaign trail for his 2014 re-election bid, when he signaled that he wanted to pass new revenues to pay for major transportation construction projects.

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On Monday, he offered up the details: His plan would raise about $6 billion for roads and bridges over the next decade via a 6.5 percent sales tax on gasoline at the wholesale level and an increase in fees for vehicle registration and license tabs. The proposal would also borrow for local road and bridge projects to the tune of $2 billion as well as pump $2.8 billion into transit and bus projects in the seven county metro area through a half-cent sales tax increase in those counties.

“We’ll have transportation improvement projects going on all over Minnesota, putting over 100,000 more Minnesotans to work, and most importantly, laying the foundation for the future economic growth and social vitality of this state,” Dayton said Monday, surrounded by transportation officials in his cabinet and Lt. Gov. Tina Smith.

His plan is not far off from one introduced by a coalition of transportation funding advocates and Senate Democrats earlier this year, but it’s a “planet” apart — Dayton’s words — from a proposal released by Republicans in control of the state House.

Comparing transportation funding plans
Gov. Dayton’s transportation funding plan, announced Monday, is similar in scope to the plan proposed by the Senate DFL earlier this month. The plan put forward by the House GOP, meanwhile, calls for significantly less funding.
Gov. DaytonSenate DemocratsHouse Republicans
Amount of funding
  • $11B over 10 years
  • $800M in 2016
  • $1.1B annually starting in 2017
  • $750M over four years
Source of funding
  • New 6.5% wholesale gas tax ($4.4B/10 yrs)
  • Increased vehicle registration and license fees ($1.45B/10 yrs)
  • ½ ¢ metro-area sales tax increase for transit projects ($2.8B/10 yrs)
  • MnDOT efficiencies (15% of agency budget — total unspecified)
  • General fund for Greater MN transit and bike/pedestrian upgrades ($145M/10 yrs)
  • Trunk Highway bonds ($2B/10 yrs)
  • New 6.5% wholesale gas tax ($580M/yr)
  • Vehicle registration fee increase($125M/yr)
  • ¾¢ metro-area sales tax increase for transit projects ($251M/yr)
  • MnDOT efficiencies (Unspecified amount)
  • Bonding for local bridge/road repair($567M)
  • Motor vehicle lease tax increase for Greater MN transit ($32M/yr)
  • State budget surplus ($200M)
  • Trunk Highway Fund ($223M in 2016–17, $282M in 2018–19)
    Dedicates 90% of "unreserved balance" of the fund
  • MnDOT efficiences ($65M)

At the heart of the two sides’ disagreement is just how big Minnesota’s transportation problem really is.

Dayton regularly cites a $6 billion revenue gap over the next 10 years, a number he culled from a 2012 report of the Transportation Finance Advisory Committee, a group he assembled. If the gap isn’t filled, he said, road and bridge conditions will continue to deteriorate across the state — and costs will go up. Republicans who control the House say it’s not clear how big the problem is yet, but some more conservative estimates put it much lower than Dayton’s proposal.

“I think it’s irresponsible to create a longer term plan if we don’t understand and agree with what the need is,” said Rep. Tim Kelly, the Republican chairman of the House Transportation Policy and Finance Committee. “We hear $10 billion, we hear $6 billion, we hear $54 billion. That’s the issue.”

At the start of the session, Republicans released a short-term funding proposal that puts $750 million into roads and bridges over the next four years by using money from the state’s $1 billion budget surplus, along with some leftover cash in the Trunk Highway Fund. Funding for the plan also calls for the state to find 15 percent in savings and efficiencies in the Minnesota Department of Transportation (MnDOT) budget.

Kelly said he agrees there’s a need for investment in transportation — “I even agree with the governor, it is his birthday,” he said — but that the two sides should to come together on a transportation target before negotiations can really begin. That could happen this year, or it could happen next session, he said.

“We have a short term responsibility to create a budget within a matter of months,” he said. “I don’t think it’s any more apparent than today … that this is a very complex issue that we need time to go through the committee process and reach an agreement on.”

Rep. Tim Kelly
MinnPost photo by Briana Bierschbach
Rep. Tim Kelly: “I think it’s irresponsible to create a longer term plan if we don’t understand and agree with what the need is.”

Dayton also doesn’t have the full backing of the state’s major business organization, the Minnesota Chamber of Commerce, which was critical to passing the last major transportation funding package in 2008.

“We hoped to see a transportation proposal that reflects focused priorities and recognizes the fact that businesses and individuals just weathered a series of tax increases in 2013,” Bill Blazar, the chamber’s interim president, said in a statement. “First, we haven’t defined what it is we need to invest in strategically. We don't yet have a reliable and consistent projection of how much investment is needed in our transportation system over the next 10 years.”

Kelly wouldn’t close the door on raising new revenues to pay for transportation projects. Likewise, Dayton wouldn’t say how he would respond to removing the metro-area transit portion of his budget — a much-loathed area of policy for Republicans — and just pass a proposal for roads and bridges.

Metropolitan Council Chairman Adam Duininck
MinnPost photo by Briana Bierschbach
Metropolitan Council Chair Adam Duininck

But Dayton said he considered the needs of both Greater Minnesota and the metro area in creating his proposal, and he prefers a plan that addresses both. Under his plan, those in Greater Minnesota would see an increase in expenses of about $15 a month, largely due to the gas tax increase, while metro-area resident would see about $25 more a month in expenses, thanks to the increase in both gas and sales taxes. At the pump, consumers would likely see 16 cents per gallon added to to the price of gasoline.

What they would get for that money: 2,200 miles of repaired roadway and 330 bridges fixed across the state, according to MnDOT estimates. The metro-wide sales tax will also help create 20 new transit-ways, which would include rapid bus service to suburban communities, Metropolitan Council Chairman Adam Duininck said. Dayton’s plan also increases direct transportation funding for cities, counties and townships, giving local governments the flexibility to put money toward projects they deem worthy of repairs.

“It takes some political courage to tackle this problem and to enact this program, that’s why transportation funding is very difficult to obtain even when it’s urgently needed,” Dayton said. “You have to have the courage and the sense of responsibility to the state to propose changes that may be harmful to you politically but are absolutely essential to a better future for most of Minnesota.”