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At Issue: Funding increases proffered

Published (5/1/2009)
By Mike Cook
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Rep. Bernie Lieder presents the omnibus transportation finance bill on the House floor April 25. (Photo by Tom Olmscheid)Flyers, drivers and riders could all benefit from an omnibus transportation finance bill.

Sponsored by Rep. Bernie Lieder (DFL-Crookston) and Sen. Steve Murphy (DFL-Red Wing), HF1309*/SF1276 contains no new money, but there are shifts and fund adjustments that could help multiple areas of need.

Passed 86-45 by the House April 25, the bill passed as amended by the Senate two days later. The House did not concur, and a conference committee is scheduled to work out the differences beginning May 1.

The bill contains $4.28 billion worth of funding, but just $195.6 million comes from the General Fund. More than $3.9 billion comes via user-generated highway funds, including $2.63 billion from the trunk highway fund, $1.02 billion from the County-State Aid Highway Fund and $275.4 million from the Municipal State-Aid Street Fund. Three smaller accounts make up the remainder.

The math becomes a bit tricky in the bill, because in order to meet the targeted $8.4 million General Fund reduction, Metro Transit would be reduced by $6.9 million, Greater Minnesota Transit by $2 million, public safety support by $266,000 and Capitol Security by $252,000, while passenger and commuter rail would receive an additional $1 million. In addition to these changes, there would be other reductions based on revenue decline.

However, a change in a tax allocation — a combined effect of this bill and the omnibus tax bill — would result in an increase in transit funding.

“If this were not to pass, Metro Transit and rural transit are really in a bind,” Lieder said. “In 2009 and 2010, Metro Transit is roughly $62 million short and rural transit $10 million.”

Because the schedule of state payments for operating procedures results in Greater Minnesota transit providers receiving large payments in July and November, some may face uncertain fiscal status before July. Testimony indicated a $7.56 million immediate need.

The bill would shift that amount from fiscal year 2011 to fiscal year 2009, with the fiscal year 2011 reduction made up using funds from the motor vehicle lease sales tax reallocation. The tax money was supposed to fund a credit for low-income taxpayers to help offset the gas tax increased in the 2008 funding law.

The tax bill would repeal the tax credit, and this bill would reallocate the funding so that 65 percent would go to Metro Transit, 25 percent to Greater Minnesota Transit and 10 percent to roads of regional significance in the Twin Cities metropolitan area.

It is anticipated the reallocation would provide the Metropolitan Council with $37 million. Combined with federal stimulus funds, transfers from two council funds and reserves and administrative efficiencies the shortage should be covered.

In conjunction with the additional funding, neither Metro Transit nor transit providers receiving assistance from the Metropolitan Council could raise fares or cut service from 2009 through 2011. Each must also provide free public regular route transit for disabled veterans. The latter comes from HF1356, sponsored by Rep. Jerry Newton (DFL-Coon Rapids).

Rep. Mary Liz Holberg (R-Lakeville) called it “irresponsible” to use funding from a volatile account, the leased motor vehicle sales tax revenue, as a funding source. “Are we going to say, ‘No matter how poor a performance is on a bus route, you can’t cut that? No matter the cost of fuel you can’t raise the fare?’”

Road construction, policy provisions

With transportation revenues not meeting forecasted levels, the trunk highway fund reserve is to the point where further declines could result in project cancellations.

Gov. Tim Pawlenty recommends a $150 million reduction for state road construction. “We took $100 million from the state road construction and we took $50 million from the other portions, which was divided between state road operations and maintenance of $21.7 million; state road infrastructure investment, $17.1 million; MnDOT buildings, $1.5 million, and from the state patrol,” Lieder said. MnDOT department support would receive an $8.7 million reduction, of which, $5 million would be an ongoing biennial cut.

Lieder noted that federal dollars help offset other decreases to provide a $67.6 million biennial increase for state road construction to $1.17 billion.

A new account would be created, under the bill, to allocate a portion of motor vehicle lease sales tax revenue to metropolitan counties for county highways that have regional or statewide significance.

Rail/air issues

The bill makes MnDOT responsible for all activities — from planning to construction — relating to passenger rail. The department is permitted to enter into all necessary agreements and is authorized to seek private and public funding for passenger rail service. Further, MnDOT would have the necessary power to carry out its passenger rail duties, including the use of eminent domain.

“Right now, MnDOT does not really have an active function dealing with passenger and commuter rail, so we gave them a $500,000 increase from the General Fund per fiscal year. That’s an ongoing increase,” Lieder said. “To accommodate that $500,000, we took $250,000 from Greater Minnesota Transit and $250,000 from the Metropolitan Council.”

The bill includes a $2.25 million increase for airport development grants in fiscal year 2010.

“It’s not additional money, but it allows them to spend down some of the money that they have,” Lieder said. “For the last biennium they’ve been hurting because the Legislature took $15 million out of their normal General Fund allowance and we haven’t repaid that.”

An amendment successfully offered by Rep. Mike Beard (R-Shakopee) would set in priority repayment of the State Airports Fund. If a General Fund surplus is anticipated, the fund would be replenished after the state’s cash flow account is filled, state budget reserve is filled and state aid shifts to school districts are made whole.

Other changes

Drivers in a 55 mph or 60 mph zone on a two-lane highway could exceed the speed limit by 10 mph to pass another vehicle. This is from HF464, sponsored by Rep. Tom Rukavina (DFL-Virginia).

Rep. Tina Liebling (DFL-Rochester) unsuccessfully tried to amend this out of the bill, saying it would put lives at stake, and would send the wrong message, especially to teenagers, that speeding is OK.

Coming from HF1608, sponsored by Lieder, is the creation of a MnDOT grant program for rehabilitation or replacement of fracture-critical bridges on a local road system.

A $500,000 transfer from the metropolitan livable communities fund would go to the University of Minnesota Center for Transportation Studies to develop land use and planning resources and strategies for local governments, and the Metropolitan Council to support greenhouse gas reduction goals by reducing per capita vehicle miles driven. Resource development is required by Dec. 15, 2010, and a report due the Legislature by Jan. 15, 2011. This comes from HF898, sponsored by Rep. Frank Hornstein (DFL-Mpls).

The remaining $2.85 million of a 1988 loan to the Buffalo Ridge Regional Railroad Authority would be forgiven by MnDOT or converted to a grant. The authority used the money to rehabilitate 41.4 miles of track in Nobles and Rock counties. “The resources aren’t there to repay the loan. It’s a low-interest, long-term loan with no requirements to make payments on a scheduled time frame,” said Rep. Doug Magnus (R-Slayton), who sponsored the provision as HF682. “The operator of the railroad is a disabled person. There’s some funding available, he believes, at the federal level for disabled-owned businesses. He’d like to get this loan off the books, move forward and make the railroad more profitable.”

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