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At Issue: Helping transit, for now

Published (5/8/2009)
By Mike Cook
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Sen. Steve Murphy, left, talks with Rep. Bernie Lieder prior to the May 1 Transportation Finance Conference Committee meeting. (Photo by Tom Olmscheid)Transit will not come to a screeching halt in some areas, road construction will not get as much state funding, but the state patrol will remain whole.

All in all, supporters say HF1309*/SF1276 is not a bad omnibus transportation finance bill in these tough economic times.

Sponsored by Rep. Bernie Lieder (DFL-Crookston) and Sen. Steve Murphy (DFL-Red Wing), the bill calls for nearly $4.29 billion worth of funding, but just $194.27 million from the General Fund, a $17.3 million decrease from the current biennium. More than $3.9 billion comes via user-generated highway funds, including $2.64 billion from the trunk highway funds, $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 bill contains no property tax increases, and the proposed taking of money designed for a gas tax credit for low-income Minnesotans is absent.

“We did most of what the governor wanted,” said Rep. Frank Hornstein (DFL-Mpls). “This is a compromise bill. All parties gave a little.”

Transit funding

Lieder and Murphy said the big issue was how to fund transit. Lieder said the Metropolitan Council — which operates Metro Transit — needs roughly $76 million and Greater Minnesota transit needs $6 million. However, no revenue source exists to help to that extent.

Working with the Metropolitan Council, Department of Transportation and the governor’s office, Lieder said a “reasonable solution” was reached.

Dollars from the motor vehicle sales tax are currently split so that, in fiscal year 2012, 60 percent of revenue will go to highways, 36 percent to Metro Transit and 4 percent for Greater Minnesota Transit. None of that changes, under the bill.

“We’re just changing those percentage amounts a little bit so we can put a little bit of money in Greater Minnesota transit and into metropolitan transit,” Murphy said.

The proposal calls for Greater Minnesota Transit to receive 4.75 percent in fiscal year 2010, before dropping back to 4 percent in future years, while reducing the allocation to the highway-user fund by 0.75 percent for one fiscal year, or about $19 million.

“We’re just going to be taking care of these folks right now,” Murphy said. “Going forward this gap that is happening there, we need to figure out how to take care of that.”

Relying on these funds for future transit needs, instead of roads, should be of concern because motor vehicle sales are decreasing, said Sen. Julianne Ortman (R-Chanhassen). “When you sell less cars, there are less revenues for MVST (motor vehicle sales tax) and we’re going to continue to raid those funds and pay for more transit. We’re creating these cycles.”

Greater Minnesota transit gets help in another pair of ways.

In addition to receiving $2.5 million to fill an immediate short-term need by shifting money from future years to fill a fiscal year 2009 operating shortfall, state payments for operating procedures are adjusted to allow for additional flexibility so that providers with cash flow issues can receive payments earlier than under the current schedule.

Both the House and Senate proposals included a $7.56 million shift to assist all Greater Minnesota transit providers, but MnDOT took a closer look at all services and determined just $2.5 million was needed to meet immediate cash flow needs. “We wanted to focus on the areas where the need would be the most,” said Deputy Commissioner Khani Sahebjam. “That way we were able to take care of those folks that really need the help.”

To help Metro Transit, the agency is permitted to transfer in fiscal years 2009, 2010 and 2011 a percentage of money not committed to grant or loan awards to its transit operating budget, from its tax base revitalization account, metropolitan livable communities demonstration account and right-of-way acquisition loan fund, as well as current and future balances in the metropolitan livable communities fund. The agency is also expected to receive about $13 million in MVST acceleration.

The transportation finance conference committee meets May 1. (Photo by Tom Olmscheid)The bill leaves Metro Transit about $3 million short, but it presumes no price hikes or service reductions will be needed in the next year.

“We will be able to balance the budget without a fare increase, but would very much appreciate we not be precluded from doing a fare increase given unusual circumstances, fuel increases, a drop in ridership and the like,” said Peter Bell, the council chair. A provision to prohibit fare increases through fiscal year 2011 was removed by conferees.

The bill does permit the Metropolitan Council to establish a pilot program to sell half-price transit fares to eligible charitable organizations for use by homeless persons.


Conferees were also charged with addressing an approximately $155 million decrease in revenues for MnDOT.

Conferees took $120 million from its construction account, $17.25 million in infrastructure operations and maintenance, $13.58 million from infrastructure investment support, $2.97 million from department support and $1.19 million from department buildings.

“All the construction people that were in the room said this is OK because they got $510 million of federal money,” Murphy said. “The locals were OK with this, as well, because a large chunk of that is going to our local partners to help with city streets, county roads and our township roads.”

The state patrol was not touched, something insisted upon by the governor.

“They’re the only ones I think we’ll see in the whole Legislature this year coming out with basically not a cut,” said Lieder, who noted the patrol got an increase of roughly $7 million with last year’s transportation finance law. “We were assuming they should feel a little pain, as all the other departments, everybody else did.”

House Minority Leader Marty Seifert (R-Marshall) expressed concern about taking $137 million from road construction and maintenance, while accelerating the motor vehicle sales tax to cover the transit shortfall. “That is one area where I feel that priorities are misplaced.”

He also said the bill does not address long-term cash flow problems in highway construction, expansion of four-lane roads and current road maintenance. “(This bill) is essentially putting together some Band-Aids on what is a very, very serious problem.”

Other provisions

The bill does not contain a Senate proposal for mandatory seatbelt usage, nor does it contain a provision from Rep. Tom Rukavina (DFL-Virginia) that would have allowed a driver to exceed the speed limit by 10 mph when passing another vehicle on a two-lane highway.

A Design-Build Project Selection Council is created to select, evaluate and support local state-aid projects conducive to the use of design-build contracting method. The council will expire the earlier of Oct. 1, 2012, or upon the completion of nine design-build projects.

MnDOT can authorize $40 million in trunk highway bonds for construction of interchanges to promote economic development and a local match for federal grants to the state, split evenly between the Twin cities metropolitan area and Greater Minnesota transportation districts.

A $2.25 million increase in airport development grants is authorized for fiscal year 2010.

An endowment account is created in the state treasury for operations and maintenance of the Stillwater lift bridge.

MnDOT is provided with powers and authority related to passenger rail, and it can create a grant program for rehabilitation or replacement of fracture-critical bridges.

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