Counties must decide how (and if) to divvy up new transit tax

At a historic meeting in St. Paul on Wednesday morning, metro-area counties will open discussions on how they will wield a new quarter-cent sales tax to create an area-wide transit system for the Twin Cities.

A state transportation bill passed last week by legislators over the veto of Gov. Tim Pawlenty allows the seven metro counties to levy a quarter-cent sales tax for transit. If all of the counties impose the tax, it would raise $100 million a year for new rail lines and busways across the metro area.

Many questions now wait to be addressed about how the new tax will work -- chief among them, whether all seven metro counties will levy the optional sales tax. And if all the counties do opt in, how will they decide where to spend the $100 million a year?

The counties must decide individually whether to pass their own sales taxes; each county's board will make that decision. Those that do would pool their money to create a regional transit system under a joint-powers agreement, said Peter McLaughlin, the Hennepin County commissioner who leads the seven-county Metro Transitways Development Board, which pushed for the sales tax.

The challenge is crafting an agreement that makes the counties feel comfortable and want to participate, McLaughlin said.

That's tricky because each county's sales tax would contribute widely different amounts to the pool.

Hennepin County -- with its large population and major commercial centers including the Minneapolis-St. Paul International Airport, the Mall of America and downtown Minneapolis -- is expected to generate 53 percent of the sales tax proceeds. Ramsey County would be expected to contribute 17 percent, Dakota 12 percent, Anoka 8 percent, Washington 5 percent and Scott and Carver just under 5 percent between them.

"The smaller counties would be concerned about having a sufficient say in how the funding is used, and rightly so," McLaughlin said. "And we [in Hennepin County] have a concern -- we are generating over half the money; we rightly want to have a say in how it's used as well."

Dakota County Commissioner Paul Krause said he is already getting asked, "What's in it for Dakota County?"

Dakota endorsed the sales tax and the larger transportation bill, but before the county levies the tax, commissioners want to see how many counties participate and what share of the pool Dakota would get, Krause said. "We are going to basically have to negotiate, the seven counties. We have to make it so everybody gets something -- their fair share."

Dakota County is planning for a high-speed busway running on Cedar Avenue within two years but would need this sales tax money to make that happen, Krause said. "We have a big funding gap for that."

Scott and Carver have not levied property taxes for transit in the past, as the other five metro counties have. To entice them to join the new transit pool, they are guaranteed to get back all of the money they contribute to the pooled fund.

Scott County commissioners have not discussed the matter, but Commissioner Jon Ulrich, who will represent Scott County at the Metro Transitways board, said he doubts that Scott will levy the tax because the county's needs for transit are being met by bus service it started with Shakopee and Prior Lake last summer.

Carver County has scheduled discussion of the sales tax when its board meets next Tuesday, said County Administrator Dave Hemze. The new tax is not a "slam dunk" in either Carver or Scott, Hemze said.

On Wednesday, the county representatives will have the new law explained in detail, McLaughlin said. The group is expected to authorize its staff to come up with a draft of a joint powers agreement to consider in about a week.

"There is a desire among some of the members to get going on this while we have good momentum and a good positive feeling about it," McLaughlin said.

Laurie Blake • 612-673-1711