Imagine the awkwardness: Charles Zelle, the state’s commissioner of transportation, was helping his daughter navigate her first car purchase recently when the dealer offered them a $300, four-year insurance policy against Minnesota’s perennially potholed roads.
Zelle, after all, is the point man in Gov. Mark Dayton’s push at the Capitol for a big boost in state spending to fix roads — asking for nearly $6 billion over 10 years, mostly from motorists forced to dig deeper into their own pockets. Momentarily offended, Zelle weighed the insurance policy against the political obstacles to getting all those craters patched.
“I bought it,” Zelle said with a laugh.
Minnesota enters 2015 with an aging transportation infrastructure in serious need of repair. Both major parties agree more must be done in the state legislative session that begins Tuesday, but progress will require compromise.
About 1,200 of Minnesota’s more than 20,000 bridges are classified as structurally deficient — they’re safe, but need to be monitored, maintained and ultimately replaced. Minnesota has the fifth-largest highway system in the nation, at 140,000 miles, and its condition ranks in the bottom third nationally. A panel of transportation experts that Dayton convened in 2012 said about $6 billion in new money is needed in the next decade just to keep the state’s current system of roads and bridges in decent working order.
At the same time, federal transportation dollars — which provided $721 million for state transportation projects in 2013 — are drying up. The state’s 28.5-cents-per-gallon gas tax is a shrinking source of revenue, thanks to more-efficient vehicles, increased availability of public transit and steep rises in the cost of steel, concrete and asphalt. Road projects are pricey: Rebuilding a rural two-lane highway costs $1 million a mile, and replacing a highway interchange can approach $50 million.
It may not be a crisis yet, but Democrats and Republicans alike see one brewing, with repercussions for the state’s economic competitiveness.
“Anybody who travels around the state knows our highways are in worse condition, our traffic congestion is getting worse, public transit is far behind other parts of the country and world in terms of its adequacy and efficiency,” Dayton said in an interview. “I can guarantee that if we don’t make it better, it’s going to continue to get worse.”
Progress hinges on whether the DFL governor and Senate can find common ground with a new House Republican majority whose leaders also call transportation a priority — but have different ideas about how to pay for it, and what to pay for.
Lawmakers last raised Minnesota’s gas tax in 2008. “A bridge fell down in 2007, and that was pretty motivating,” said Zelle, previously the CEO of the Minneapolis bus company Jefferson Lines. “I say we shouldn’t wait for a bridge to fall down. It is a long-term issue, and requires a long-term solution.”
The state we’re in
It’s not your imagination. State roads are in bad shape.
Roughly half of Minnesota’s 12,000-mile state highway system is more than 50 years old, and needs to be repaired or replaced. That puts Minnesota 38th in the nation for highway pavement conditions.
Patching potholes on roads that old is so pointless that some transportation professionals call it “painting the road black.”
The Interstate 35W bridge collapse in 2007 spurred a particular focus on rebuilding bridges in Minnesota, and much of the new revenue raised by the ’08 gas tax increase helped replace the St. Croix, Wakota and Hastings bridges. A 2013 study by Transportation for America, a Washington, D.C.-based advocacy group, said only 19 U.S. states had fewer structurally deficient bridges than Minnesota, which had 1,191.
Beyond that, 35 percent of Minnesota’s highway bridges are more than 50 years old, a milestone generally seen as the end of a bridge’s working life, and many more will reach that point in the next two decades.
A sagging infrastructure and highway congestion costs Minnesota consumers more than $800 a year in wasted fuel costs and time. A 2014 survey ranked Minnesota 16th in the nation on a list of cities with the worst congestion, finding that metro-area commuters wasted 24.5 hours in traffic last year, four more hours than the previous year.
“People tend to think that eventually, MnDOT is going to get around to fixing that bad road they drive on every day,” said Margaret Donahoe, executive director of the Minnesota Transportation Alliance, a coalition that lobbies for higher transportation investment.
That coalition’s roster of local governments, labor unions, and construction and engineering firms backs new taxes to pay for transportation. But while advocates argue that declining infrastructure hobbles economic growth, many businesses are reluctant to back tax increases that would hit their balance sheets.
“They look at it and say, ‘We pay a lot in taxes already,’ ” said Bentley Graves, a transportation policy expert at the Minnesota Chamber of Commerce.
Businesses like Marvin Windows & Doors depend on the state’s roads to conduct commerce and support some 2,200 workers. Roughly 100 trucks arrive and depart the Warroad manufacturing plant each week with raw materials, supplies and finished product. Dan Lykken, the company’s transportation director, demonstrated the challenge ahead of Dayton and advocates with his refusal to sound any alarm bells.
“I would say the roads are pretty good, but there’s always room for improvement,” Lykken said.
Dim funding outlook
At current state funding levels, $39.3 billion is expected to be raised over the next 20 years for all infrastructure, according to the Minnesota Transportation Finance Advisory Committee, the group Dayton convened in 2012. That’s $21.2 billion short of what the group estimated the state would need just to keep Minnesota’s current system functioning, never mind expanding it.
The roughly $6 billion in new funds sought by Dayton is intended to cover existing needs for the next 10 years.
Federal help looks increasingly unlikely. The federal Highway Trust Fund, which relies on the federal gas tax to pay for roads and transit, has teetered on the brink of insolvency in recent years amid congressional gridlock and deep aversion from congressional Republicans to new taxes. The most recent $11 billion patch to the fund occurred last summer.
Contributing to the conundrum: Gas prices in Minnesota and elsewhere have plunged to their lowest level since late 2008, thanks to fuel-efficient vehicles and people driving less, especially millennials. A spike in domestic oil production, including in western North Dakota, has also contributed to lower prices at the pump. That’s according to a November report by the U.S. Energy Information Administration, which found domestic oil production jumped by about 1.8 million barrels a day from 2011 to 2013.
Before 2008, Minnesota’s Legislature did not increase the state gas tax for 20 years. The federal gas tax has remained at 18.4 cents a gallon since 1993.
Taxpayer sentiment was clear at Stockmen’s Truck Stop in South St. Paul, even among people who think more should be done to fix the roads.
Politicians “don’t need to tax people more,” said Tony Deckard, who works in the maintenance shop. “As soon as gas prices go down and we get a break, now they want the price of gas to go up? That will rub the public the wrong way.”
Bipartisan opportunity, risk
Dayton is proposing a different style of taxing gasoline than the current tax-per-gallon approach, which raises the same amount per gallon no matter how much gas costs.
Dayton is still working out the details of his proposal, which he calls a “wholesale gas tax,” resembling a traditional sales tax. It’s collected as a percentage of the price of fuel rather than a flat dollar amount per gallon, meaning the state’s take would rise and fall with gas prices.
Dayton said under his proposal, the state’s 28.5 cent-per-gallon gas tax would remain in place. At current gas prices of around $2.15 per gallon, the wholesale tax would likely result in about 12 cents per gallon more to fill a tank.
Republican governors in Michigan and Wyoming have recently supported gas tax increases for roads. Even Wisconsin’s Republican Gov. Scott Walker has suggested swapping the state gas tax with a sales tax on fuel at the wholesale level, similar to Dayton’s proposal.
State Rep. Kurt Daudt, R-Crown, incoming House speaker, said his party is willing to consider new revenue. “A gas tax is not off the table,” he said.
But the Minnesota Republican Party publicly opposes new fuel taxes. Republicans have suggested alternatives that include tapping the state’s $1 billion budget surplus, diverting a small portion of the general state sales tax or borrowing more in the form of construction bonds.
Transit remains politically divisive and frequently criticized by state Republicans, though the state investment in transit is a fraction of what is spent on roads. Dayton also is proposing a half-cent sales tax increase in the seven-county Twin Cities metro area to pay for transit in those counties.
Sen. John Pederson of St. Cloud, the ranking Republican on the Senate Transportation Committee, said he thinks Republicans might vote for a transportation-linked tax increase only if Dayton and DFL lawmakers cut another tax, such as the statewide property tax or the corporate income tax.
Dayton said increased spending for transportation and schools are his top two priorities of this year’s session. Tough as it will be to sell higher fuel taxes to voters, Dayton called it necessary.
“The money’s going to have to come from us,” Dayton said. “There’s no free way out of our predicament.”