The primary mood among Minnesota state lawmakers this session is giddy, that lighthearted feeling that comes from the spending and tax cut potential of a $17.6 billion surplus.
That mood stops at the doors of the two transportation committees. While general state income and sales taxes continue to exceed even optimistic projections, the taxes that provide for road construction and maintenance and transit systems are going in the other direction.
Gas taxes, motor vehicle excise taxes and tab fees are all coming in lower than was projected a year ago, leaving holes in the funding streams for highways and transit. While other committee chairs are talking about spending increases and tax cuts, the transportation committee chairs are looking at cuts and proposing tax increases.
[image_credit]MnDOT[/image_credit]
Why the difference? The pandemic did more damage to the transportation tax sources than to general fund tax sources. Blame lower car sales during the recession and then lower sales when chip shortages reduced supply. Blame less taxable gas purchases on factors like more efficient vehicles and a spike in gas prices that doesn’t benefit the state’s per-gallon tax.
To be clear, budget analysts say, revenue from these taxes is growing — just not like other state taxes and not enough to keep up with transportation expenses. And those general taxes are outperforming the projections of economists, while transportation taxes are underperforming.
[image_credit]MnDOT[/image_credit]
Transportation taxes raise around $5 billion every two years.
“Revenues continue to grow year over year,” Brown said. “However, the growth rates are less than what we had assumed last February. The reality is, revenue is not keeping up with inflation.”
Then there’s the Met Council, the primary provider of bus service in the Metro area of Minneapolis and St. Paul. It relies on the motor vehicle sales tax — 40% of which goes to transit with Metro Transit getting 36 percent. But those collections have suffered as well. Mary Bogie, the regional administrator for the Met Council, told the committee that it, too, is growing year over year but is below what was forecast.
The money funds buses, not the light rail system, which has its own money troubles. And the current shortfall — $37.5 million this budget period on a base of about $740 million — isn’t necessarily new or short lived. The council staff estimates that the motor vehicle sales tax dedicated to buses will produce $121.4 million less over the next four years than had been estimated by forecasters.
[image_credit]Metropolitan Council[/image_credit][image_caption]Motor vehicle sales tax revenues[/image_caption]
“We have long been struggling with revenue that doesn’t support the needs of the system,” Bogie said.
Hornstein sponsored a package of transportation tax hikes in the past, including in 2021. Those increases didn’t get through the GOP-controlled Senate, though the Senate did agree to additional funding to expand the regional bus rapid transit network. In the recent past, GOP lawmakers have moved to devote state sales taxes collected on car parts to roads and bridges. That raised nearly $200 million in 2022.
[image_caption]State Rep. Frank Hornstein[/image_caption]
“We’ll bring those back and then some,” Hornstein said. One idea used in Colorado is to assess a fee on deliveries such as those made by Amazon vans. He is also looking at ride sharing services, something the non-driving transportation chair uses when his normal bus commute is disrupted.
“We’re going to be creative, we’re going to be innovative, and we’re going to address the gap,” he said. While the pandemic contributed to revenue declines — and also led to some federal emergency cash help — the trend remains down.
“The long-term prognosis is still problematic,” he said.
Transportation Commissioner Nancy Daubenberger told the House committee that Gov. Tim Walz will present his budget plan next week that would include transportation funding.
“The department is very interested in working with the Legislature on additional revenue,” she said.
There will never be enough money to satisfy the “tax and spend” policies of the DFL establishment.
Which roads do you want the state to close?
This article is a huge example of when big short time infusions of cash is harmful to overall budgets. The extra money is short lived but the increased budgets stay causing easy to predict shortfalls.
Our state is too flush with cash with too many giddy legislators who want to spend, spend, spend. What they don’t do is take the time to consider what happens in the future when that money is no longer there.
Spending other people’s money is not leadership. Keeping sustainable programs with as low of a tax burden is.
It seems that neither you nor Mr. Gotzman understand how transportation projects are funded in Minnesota.
Maybe we could open up the highway and transportation projects to non-union companies and workers?
Oh – maybe I do not understand how the establishment -trickle down game is played.
Or maybe you do not understand that transportation funding is by the gas tax, vehicle registration fees, and sales taxes on cars and trucks.
Giving workers the shaft is not the answer.
Open it up to non-union? Again, no such thing as a free lunch. When I worked in Eden Prairie/Hopkins in the early 1980s, part of Hwy. 169 between 494 and the Crosstown Hwy was built or rebuilt by a firm from Kentucky. This was non-union. Used to see the company’s trucks and the cars of the workers w/Kentucky plates twice each day in my commute.
On the media, republican politicians crowed on how this project was a new era, taxpayer money being saved…..
In very short order, the northbound lane between roughly Braemar Arena and the Crosstown that climbed elevation had the concrete highway slabs soon settle flat, like a series of steps as it went ascending. These were not slight shifts. I learned to hold my hand over a capped coffee mug – as from the rocking it would shoot coffee out any opening.
I had a very merry time in the company truck riding with a conservative co-worker, driving and holding an uncovered large soda cup when we hit the worst of it and most of that ended up in his lap. He had insisted on driving that route so he could show me, a naive young liberal what republicans could do.
In short order, republicans, politician or common person did not want to talk about that “project”. A few years later the road was rebuilt. Yeah, Ron….some real “savings” there.
Transportation, in all its complexity, its essential nature to our economy, its importance to our communities and the sheer size of our state– that the huge public investment in transportation somehow can be ‘free of charge’?
That’s some serious magical thinking.
The costs must be met with the money to pay for them.
This is not a problem that righteous self-reliant individuals can solve by themselves. It is a Public problem for our governments to solve for all of us.
I think children should be taught that there is no ‘free lunch’ so that when they grow up and get a job, they understand they must pay taxes out of their earnings. It is ridiculous to have adults focus on their own money like it’s all theirs to keep. There is a real, necessary, social contract for living here.
I think when people fill up their gas tanks they expect that the $0.285 per gallon gas tax that the state charges them is to be used to maintain the roads. That’s almost $3 of state taxes every time they buy 10 gallons of gasoline. That’s almost twice the profit than the average gas station makes (.15/gallon). Hardly a free lunch.
The problem I see is not that people who pay gas/vehicle excise taxes expect that revenue to pay for the costs of their transportation; it is a constitutional requirement that gas tax revenue be applied to road costs. The problem I see is that they don’t recognize that that revenue hasn’t been enough to pay for the total costs of transportation for decades (road construction and maintenance is always getting bailed out from the general fund), and they refuse to let the natural solution (raise gas/vehicle excise taxes) occur.
Vehicles are heavy, and there’s a lot of vehicle traffic on Minnesota roadways. This creates a need for regular road maintenance when the roads crumble under that weight and volume. They require greater maintenance than if people transported themselves in more efficient (mass transit) or less intensive (walking, bicycling) methods. This is compounded by the fact that average vehicle size and weight is increasing (trucks, SUVs) and more freight is diverted from railways to roadways (both long distance trucking and last-mile deliveries).
I walk to work and drive sparingly. I feel as if my choice to engage in less-intensive transportation is also a choice to subsidize cheap gas for people who drive everywhere for every task and don’t want to consider the financial consequences of that kind of lifestyle, because the general fund I pay into is being used to shore up a roads fund that is underfunded by it’s primary revenue source.
You do realize the Metro Transit receives the highest percentage of its funding from the motor vehicle sales tax and very little from fare revenue.Motor vehicle drivers subsidize mass transit even though most of us don’t use it and the entire system loses $100’s of millions on an annual basis.
One goal of public transit is to reduce congestion from single-occupant vehicles. So road users do get a benefit from public transit, though not as much as if they used it. Similarly, road users fund HOV lanes through gas, registration & sales taxes. But you can’t use that bit of road unless you have multiple people in your car or pay a use fee. Which basically means our freeways have crowded lanes for the masses, and fast lanes for the people who can afford it.
Actually Jeff, the rural areas contribute the least to the highway funds but receive more than the metro areas.
Exhibit ‘A’ of magical thinking. The road was first built, then maintained, then re-built., regardless of your tax rate on the last tank.
There are thousands of others costs that have come before and will come after.
You have not done the math, yet you conclude you have calculated correctly.
But the thing you seem to always miss in your comments– “There is a real, necessary, social contract for living here.”
The question is whether that $3 per tank covers the construction & maintenance of those roads. If those costs are higher, there’s a free lunch. If the costs are lower, there’s a surplus.
If you’ve read the article, you already know the answer: the funding dedicated to transportation is inadequate to keep up with expenses. Enjoy the free lunch!
Do you really think the taxpayers of Minnesota are getting a free lunch. Maybe we should teach our children to spend within their means and when they don’t you can’t expect someone else to pay for it.
There’s no problem with wanting to keep as much of the money you work for and earn. The problem is a government who wants to take more and more of it …. even as they sit on a $17 billion taxpayer surplus.
By expecting it to cost you less than it actually does, you are indeed expecting a ‘free lunch’ (from all the rest of us who pay.)
Your expectations are not thought out.
“There is a real, necessary, social contract for living here.”
And we pay that societal contract through numerous different daily and annual taxes. Is a $17 billion surplus not enough reason to not tax the contributors more.
This year, with the huge surplus, state transportation funding is a problem of allocation– not taxation.
But we should accept the fact that road and rail systems need steady maintenance and improvement.
Who do you think is the genuine “conservative” in this thread? Not the tax phobians.
Taking care of roads is what we do at the township level. They need upkeep and rebuilding sometimes.
Planning for that is wise and “conservative” of all the resources invested.
Re the aviation side of transportation, can someone explain to me why the main terminal of your international airport continues to be named for a Nazi sympathizer? Thanks.
It is now Terminal 1 and Terminal 2 the last time I checked. But yes, the aviation hero will be removed from history at some point.
Well the good news is most of the transportation taxes are as they would say optional. Don’t buy a car, no car sales tax, no yearly registration tax, no gas tax, no Insurance costs, no maintenance costs. For the rest of us folks its the price of convenient transportation. However, it would be nice if the City, County, State would at least enforce tabs, as Richard noted, “no free lunch”! Well there shouldn’t be anyway.
Do you use mass transit ? This is a free lunch program including the use of motor vehicle sales tax and $726 million in Covid relief funds for a system that loses $100’s of millions annually.
The unelected Met Council continues to pour money into failing projects and Hornstein wants a provision to allow them to implement a new seven county transit tax.
It would be nice if they at least enforced fare revenue from the riders that use it.
It’s a funny “free lunch” that charges $2 for a ride or $2.50 at rush hour. When’s the last time you paid a toll to hop on the freeway?
It’s a funny “free lunch” that charges $2 for a ride or $2.50 at rush hour. When’s the last time you paid a toll to hop on the freeway?
Minnesota fare evasion rates are lower than that of NYC’s, which is funny, considering how many times NYC style turnstiles are cited as a potential ‘solution’ to the ‘problem’ of fare evasion
What’s not funny is the millions Metro Transit loses every year and the amount of taxpayer money wasted by the Met Council.
Your $2 contribution is much appreciated.
Yeah. No mention of raising fares to cover shortfalls in the transit budget.
Well, typically not, but you say free lunch program, I think not, since I pay taxes I am paying for the availability to use that lunch at some point in time, it appears your suggestion is that we no longer contribute to any taxpayer funded initiative, you know like the Freeway System, Airports, police departments, fire departments, charitable contributions, Dept. of agriculture, education, home land security, etc. etc. etc. ! If I don’t use it, its a free lunch right?
My suggestion is we don’t need to look for raising and creating new taxes when there’s a $17 billion surplus. When the economists revenue forecasts are wrong the taxes will still be there.
Hopefully that’s clear vs the word salad you suggest I’m saying.
Well Jeff, the present surplus is a one time deal, you know like when auntie M leaves you an inheritance, you throw the party, and now its all spent. Some folks realize life still goes on, and it will cost $ long after the inheritance is spent. “When the economists revenue forecasts are wrong the taxes will still be there.” Really? we never experience economic shortfalls? Isn’t that what the article is all about, potential economic shortfalls in transportation? “Budget picture not so rosy for Minnesota transportation”
We all knew this was coming. At the end of the day, after the DFL has paid off all of their friends and made government larger in the process, the result will be “What surplus?”
MODERATOR: You indulge Mr. Tester while apparently disallowing a reasoned, logical response in my responses.
Here he goes off topic of transportation to take another cheap shot at legislative spending THAT HASN’T EVEN HAPPENED YET.
I’ll stop posting here if that is what you want. I do not abide the incessant anti-tax anti-government memes that you seem to encourage in Mr. Testers frequent rants.
You may delete this please,
and if you don’t want my replies, delete them now so I won’t wait for another response. I enjoy the smart commentariat here but it can be frustrating to try to confront others thinking when I am silenced.
Thank you. Please delete this post
I can relate!
“THAT HASN’T EVEN HAPPENED YET.”
But it will.
As for not happening, Minnesota was going to become the wild, wild, west after concealed carry. We were going to be tripping over all the poor when the nation required work to be tied to welfare. Thousands of women are supposed to be dying from back alley abortions since Roe vs, Wade was overturned. The list goes on, and on, and on. And I don’t recall this complaint back then…
A real simple solution, or it could have, would have been if we/they had not spent the BILLIONS of dollars on an antiquated, obsolete, 19th centry light rail system that has swallowed up more money than the largest sink hole in the world and continues to consume the greatest amount of transportation costs. But boy do those democrats love to see the choo-choo running empty cars up and down University Ave and say that’s their legacy. I/We know better what you want and need than you do, That’s why I voted as I did. Paul wellstone.
Trains, bicycles, and automobiles are all 19th century technology. Why should only one of them be regarded as obsolete (and only when transporting passenger traffic, since I’m sure you support freight rail)?
I used to have mixed feelings about light rail until I visited Chicago when my daughter moved there. You can go almost anywhere in the city by light rail conveniently and not inexpensive, avoiding the horrific, polluting vehicles that congest the highways.
If someone builds a store, they usually need to provide appropriate parking space. Because of variety of non car issues in chicago, such as light rail, buses, taxis, Uber, Lyft…often times they can receive variances.
Once one sees the effectiveness of light rail, it becomes difficult to continue to rely on only cars.
And costs…while the cost for building light rail is similar to building a freeway, the maintenance is not…and if the light rail cars are full, you can add more cars or more trains. With a highway, it’s really expensive to build more lanes…and it’s a lot more expensive to maintain them than light rail.
“Revenues continue to grow year over year,” Brown said. “However, the growth rates are less than what we had assumed last February. The reality is, revenue is not keeping up with inflation.” And inflation is caused by government spending. Problem? Meet solution.
What a bunch of whiners! Yeah things were way better under TPaw with a $2?B deficit and a full gimmick budget. Today got a surplus and a pretty much pay as you go style budget, (balanced budget) and it makes no difference, whine, whine whine, you don’t want good roads, bridges etc. DON’T DRIVE, just think of all that tax $ you won’t have to give to the gubmint! You’ll can get one up on the libs, let them pay for all of it, that’s what you want isn’t it?
So the boondoggle called the train from Mpls/St Paul to Duluth is dead in the water?
Can anything be learned from SWLRT?
The insatiable beast called government must be fed.
Speaking of free lunch, why are the plug in electric cars getting their charging stations subsidized as well as not having to pay tax on their fuel, like the rest of us, to maintain the roads? When is that going to be addressed?
Better question, why are they continuing to throw money at ethanol subsidies when it is clearly a dying technology?
Ethanol production is expanding worldwide. Does anybody but you know it is dying technology?
Even better news. Since ethanol is clearly winning in the marketplace (according to you) we can end all government mandates and subsidies. That would save taxpayers billions of dollars. Yay capitalism!
Those charging stations are also great a source of quick income for your local copper scrapper. Now tell me how the current urbatopian pols aren’t totally looking out for all of us. Everyone wins!
One piece of transportation funding – licensing – should be changed, to steeply graduated fees based on psi on the road when the vehicle is @ manufacturer-defined gross vehicle weight.
Agreed. But does everybody know that electric cars are heavier and put significantly higher stresses on the road surface?
Maybe transportation as the Met Council envisions isn’t the answer for this Metro area. The latest articles re the crime didn’t help. I suspect many seniors would give up a vehicle if they had a viable alternative. If you take the statistic that most people do most of their trips in an 8 mile radius of their home; and allow that just about nobody would consider taking mass transportation for grocery shopping or medical issues and accept the reality that the weather here is a problem. Perhaps consider destination driven transportation. To theaters, airport, sporting and music venues. The only real successful bus route is the one to the State Fair. The downtown areas have long ceased to be viable as destinations for employment or shopping for a very long time. Could the option of town taxi’s be an option, for the short hops within the 8 mile radius?
The state demographer doesn’t project a growing population for Minnesota. How many more people from the rural areas are projected to live in the metro area? Remote work for many seems to be staying. Is the metro transit system in its current configuration the only option on the table?