Transportation bill provision sends Met Council scrambling to fund Southwest LRT planning

MinnPost photo by Bill Kelley
As a result of pulling the money, the Legislature sent Metropolitan Council staff — and Southwest LRT’s project office — scrambling.

State lawmakers slipped a little surprise into the transportation budget bill that passed in the closing hours of this year’s legislative session.

Couched in language that only an insider would understand, the Legislature yanked almost $30 million in funds intended to cover part of the state’s share of Southwest Light Rail construction.

That figure was what remained of a $37 million appropriation that the Legislature had made in 2013 — money that was a down payment on the state’s $160 million share of the proposed $1.66 billion line, slated to run from downtown Minneapolis to Eden Prairie.

As a result of pulling the money, the Legislature sent Metropolitan Council staff — and Southwest LRT’s project office — scrambling. 

The original 2013 appropriation, it turns out, was being used to pay the on-going costs of planning the 16-mile extension: funding project staff, engineering and environmental studies  — pretty much everything that is being done to get the project ready for presentation to the federal government next year for environmental approval, and to make sure it’s eligible for matching funds.

And without on-going funding for the project, the Met Council and its Southwest Project Office would not be able to do what Gov. Mark Dayton directed it to do in April, when an updated budget pushed the project cost from $1.66 billion to almost $2 billion: look at alternative transit modes for serving the southwest suburbs; hire consultants to measure the quality and capabilities of the project’s staff; and begin an on-going attempt to reduce the project budget back to $1.66 billion.

Those key budget decisions are expected Wednesday from a committee made up of elected officials from communities along the proposed line: Minneapolis, St. Louis Park, Edina, Hopkins, Minnetonka and Eden Prairie.

Temporary funding mechanism approved

To solve the short-term project financing gap created by the Legislature, the Met Council last week approved a temporary funding plan to keep the office running through early next year. The plan, which involves moving around other funds in the Met Council budget, was made a bit easier thanks to another quirk of the state transportation budget. While the Legislature rescinded $29.7 million in unspent SWLRT money, it actually added money to the Met Council’s budget for transit improvements.

What that means is that in order to pay for SWLRT planning, the council will shift $13 million from a reserve fund paid for by the Motor Vehicle Sales Tax — then use the money appropriated from the Legislature this year to backfill the money that was just shifted over to fund the project’s ongoing operations.

Taken together, it means that it will leave operations “with no negative impact,” said Metro Transit finance director Ed Petrie at discussion of the Met Council’s transportation committee on June 24. But Met Council and committee member Gail Dorfman wondered if that was true. “It’s not like it has no impact because we would have used that $13 million in a potentially different way,” she said.

Still, the committee members endorsed the plan as a “creative solution” forced on it by the Legislature. “I’m frustrated that the Legislature puts us a position to cannibalize other services,” said Met Council Member Jennifer Munt at an earlier transportation committee meeting. She also feared that it sends a bad message to the Federal Transit Administration, a fear confirmed by Southwest LRT project manager Mark Fuhrmann.

“It is not a positive message to FTA,” Fuhrmann said. The FTA monitors local funding issues “with great interest” and said the council staff must provide a formal funding update at the end of the summer. “They will identify this as an additional stress on the council’s transportation budget.”

‘Tough decisions’ if state doesn’t come through

The one-time budget shift covers a critical short-term problem for the Southwest Project Office: keeping the lights on. But if the Legislature does not agree by next session on some way to cover the state’s 10 percent share of the line, the Met Council will have to scramble again to find the money from other local sources — or lose the project. One proposal that went before the Legislature in the 2015 session that could come back in 2016 is Dayton’s request to give the five counties in the Metro area authority to increase an existing transit sales tax. Proceeds from that proposal would have covered the final $160 million in project costs for Southwest LRT.

In lieu of dedicated funding, the Met Council has also floated an idea to sell “certificates of participation” to investors to raise the amount now projected to come from the state. That financing method would have investors front the council now and be paid back over time with interest. The source of the money that would be used to repay investors wasn’t clear, but it could come from other Met Council transit funds.

Met Council chief financial officer Mary Bogie posed the issue as: “How we plan to move forward with the state financial commitment without a commitment from the state.”

The certificates were not her first choice as a funding mechanism, Bogie said. And she said she hopes the 2016 session of the Legislature will produce better results for the SWLRT project. But, she said, “if the state’s not there for filling its share, the council will face very tough decisions.”

The discussion of certificates of participation is what elicited a formal letter from state Rep. Tim Kelly. The Red Wing Republican, who chairs the House Transportation Committee, said the potential use of COPs “raises serious concerns.” Kelly’s June 23 letter to Met Council Chair Adam Duininck, questioned why — in the face of escalating project costs and lawsuits challenging the plan — the council “appears to be moving forward full steam ahead.”

“The implications of the council’s proposed alternative funding scheme are staggering for taxpayers and state and local policymakers,” Kelly continued. “Greater consideration of the proposal’s legality and risk are needed before any further action is taken.” He asked for answers to a series of questions, including what the debt service would be on the certificates; what source of money would be used to repay them; and “what transit projects will not be funded now because of the use of these MVST funds being reserved to pay off these COPs?”

Neither the transportation committee nor the full council was asked to approve the COP plan, but staff members said they could come back next year if the Legislature doesn’t act on permanent funding. The rest of the local share of funding for Southwest LRT includes 10 percent from the Hennepin County Regional Rail Authority and 30 percent from the Counties Transportation Improvement Board. If the project is approved by the FTA, the federal government would contribute 50 percent of the project’s total cost.

‘The line is in re-examination mode’

Senate Transportation Committee Chair Scott Dibble said he wasn’t trying to send any messages about the future of SWLRT when he signed onto the $29.7 million cut in the omnibus transportation bill. Instead, the conference committee he and Kelly co-chaired was faced with a tight spending target, and they saw the light rail money as being available to help fund other transportation needs.

“The line is in a reexamination mode,” Dibble said. “It makes sense while that is ongoing to make use of those dollars.” He advised against using the budget as “a foreshadowing that the project is not going to be built.”

That said, the Minneapolis Democrat said he was not fully aware that some of the $29.7 million was needed to cover on-going staff costs rather than being held in reserve for eventual construction. He said he is comfortable with the Met Council shifting other funds temporarily and expects to take another look at transit funding next year. If the Met Council can show the project budget is under control and SWLRT is a viable line, he will support additional money for construction.

Can he overcome House Republican opposition? Dibble described himself as “ever optimistic” and said that at some point Republicans will have to compromise on transit to get the roads and bridges money they seek.

“Republicans are super-sized anti-transit — not just rail but all transit,” Dibble said. “But they say they really like roads and bridges. At some point along the way we’re gonna have a deal.”

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Comments (10)

  1. Submitted by Todd Hintz on 06/30/2015 - 12:33 pm.

    Transportation Tax

    What we need to do is enact a metro-wide transportation tax to fund this and similar light rail projects. That’ll take care of the fickle funding from the legislature. Currently we have a ¼¢ tax, whereas other areas like Texas and Utah run 1¢ to 1 ¼¢. What that allows them to do is run forward with multiple lines simultaneously, rather than nickle and dime, scramble and jig on a single line like Minnesota does.

    It’s a little perplexing as to why other conservative metro areas are into light rail in a big way, whereas Minnesota conservatives oppose it at every chance. I suspect part of it is because they are simply against something that their opponents are for, no matter what that item may be.

    Another reason is they want to strip the money from light rail and divert it to highway construction instead. New highways in the metro area open up additional land in the outlying areas for new development. And in rural areas they become a jobs program as people get temporary employment on the construction crews. There are a couple of problems with these approaches though.

    1. Additional development means additional maintenance costs sixty years from now. All those water, sewer, and gas lines need to be updated and repaired at some point.

    2. The roads themselves need periodic maintenance and Minnesota already has one of the highest number of paved roads in the country, even though we’re not a large state. Some government entities are looking at those ongoing costs and have decided to revert roads to gravel as it’s cheaper to maintain.

    3. If people are really concerned about helping rural Minnesota remain viable, a better (and cheaper) tact to take would be to get decent broadband rolled out state-wide. That gives people and businesses access to additional information, more markets, and makes them more productive. At the company I work for we have quite a few people who work several days a week (or permanently) from their home offices, many of which are in rural Minnesota. They wouldn’t be able to do that if they had limited or no internet access.

    There are projects we can work on that lets everyone achieve their goals. We just need to hire legislatures who share that vision.

  2. Submitted by Dan Berg on 06/30/2015 - 05:15 pm.

    Tax the mode being built

    Just tax the mode being built. That would ensure stable funding and efficient building practices and encourage smart growth. Smart growth being that which can be sustained by the economic activity of what is newly developed. Taxing one method of transportation to pay for another makes zero sense as it is a self defeating design with the side effect that it creates conflict by pitting various constituencies against each other politically and socially. Taxing unrelated activities, something like sales tax to pay for transit, is simply a political game and anathema to sustainable design as decisions in politics are based on tribal loyalties and not good information and problem solving. The key to efficient use of our resources is to connect use and costs. Disconnecting them artificially increases consumption and waste in order to create the illusion of economic activity and “growth”.

    • Submitted by Wayne Coppock on 07/02/2015 - 08:54 am.

      Does that mean I can stop paying the rather sizable portion of my taxes that goes to highway construction and maintenance then? Because I don’t own a car or drive, so maybe I’m tired of paying for all those roads. I’m ok with local streets because I still ride a bike and bus, but I see no reason to be paying for your highways via unrelated taxes on my income to the general fund.

      • Submitted by Dan Berg on 07/02/2015 - 01:08 pm.

        Yup, that would be a significant element of that method would work. Local streets would be covered by property taxes as they are required to access individual properties. Buses (and heavy trucks) would need to pay their share of the arterial roads and freeways they use and do so at a significantly higher rate than passenger vehicles because they cause significant wear that increases. That same weight issue also causes significant wear on local roads supported by property taxes which could be offset by increased license fee that would be passed on to fright and transit consumers.

        By they way they aren’t “my highways”. I am completely indifferent to what modes are used. I live on the border of Minneapolis and St. Paul and will myself switch between car, bus/train, bike or walking depending on the situation. Client meetings in Stillwater or Minnetonka I drive, to the office most days I take bus/bike/train. Nobody should be forced to pay for anybody else preferred method of getting around. Just price them according to actual costs and let people decide.

  3. Submitted by richard owens on 07/01/2015 - 09:26 am.

    Deception in Legislation

    “Couched in language that only an insider would understand, the Legislature yanked almost $30 million in funds intended to cover part of the state’s share of Southwest Light Rail construction.”

    How can our Legislature work together on budgets when Legislation is brought to the process with hidden “gotchas” that seem to be designed to trick members into voting for something they don’t even know about?

    Basic transparency and civil “manners” should be something we EXPECT from those we send to do the State’s business.

    Maybe it has always been thus, but it seems to me that party warfare, using strategy and tactics has replaced crafted legislation that passes using persuasion and open discussion of the merits.

    Why should the citizenry have to put up with dishonesty in budgets? Why shouldn’t we expect apologies and promises to cease this crooked style from those “ladies” and “gentlemen” who hide their intentions and their agendas?

    Americans have seen too much of this in D.C. already- the leveraging of must-pass omnibus bills laced with poison, just to get what the majority does not want. To see it in Minnesota is all the worse- after all, the lobby money can’t possibly be enough to sell one’s character for a measly campaign contribution.

    Can it?

  4. Submitted by Chad Quigley on 07/01/2015 - 11:22 am.

    Scrap it all together

    LRT in MN and pretty much everywhere else in the country are huge boondoggles and money pits. If the limousine liberals want these out dated modes of transportation built, I say pony up the money yourselves or maybe there should be a public transportation tax on those who use public transportation just like the fuel tax people like me pay when we put fuel in our vehicles. No longer should my federal gas tax or my license tax be spent on building tin cans no one rides. Of course if you made those who actually road public transit pay for it, you’d have to make sure everyone was paying to ride public transportation, something that isn’t happening now.

    • Submitted by Wayne Coppock on 07/02/2015 - 08:57 am.

      Your fuel tax doesn’t even come close to covering the cost of your roads. You take money out of MY pocket to pay for your roads from the general fund. How about you quit expecting a free ride and start paying for your highways? Make every road a toll road to actually cover its own costs and see how well that works out.

      • Submitted by Dan Berg on 07/02/2015 - 10:34 am.

        Good idea

        I actually think if we charge road users for the actual costs it would work out fine. Tolls based not just on distance but vehicle weight (commercial trucks and buses wear roads out while passenger cars have almost no effect) would be a great method and fairly easy to implement given GPS technology. Costs per mile would go up but that would encourage efficient growth and fuel usage. Doing that would allow us to charge the users of rail and buses the actual costs of those systems as well. In total we would get a much more efficient system that wastes less in building needed infrastructure, the cost of maintaining that infrastructure and the fuel to use it.

    • Submitted by Richard Held on 07/07/2015 - 08:20 pm.

      LRT does serve a purpose

      I had to go downtown a number of times this spring. Trying to find a place to park during the weekdays is a royal pain. By taking the LRT into downtown I spared myself a lot of frustration–and parking money.

  5. Submitted by richard owens on 07/01/2015 - 02:50 pm.

    Scrap it in DAYLIGHT if it is to be scrapped.

    Your need for light rail is probably zero.

    Don’t pretend highways aren’t BY FAR the biggest subsidized public infrastructure.
    We need about 6 billion to just do the maintenance on them. Compare to LRT.

    Mine need for light rail is probably zero. I can’t use buses either- too rural.

    The Metro area? Limitless possibilities exist to live without a private vehicle if folks can be moved to work, shopping, daycare, entertainment, and back without owning a car, using gasoline or risking DWIs or being hit by one.

    Not everything that makes life better for the majority appeals to the few.
    Citizens should not be too selfish in what they will support, especially if it serves a better purpose.

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