Gov. Mark Dayton is right: We need to get real about transportation. Minnesotans demand safe and efficient movement of people and goods. We need to find new ways to ensure sustained investment in roads, bridges and transit. Our present funding falls short of maintaining our existing system, let alone allowing for strategic expansion.
But that should be the second of two important steps in the Capitol debate.
The first reality check is to reach consensus on how much we need to invest — and what the various levels of investment will “buy” us — in the next decade. There’s less agreement on this than the governor and transportation special interests want you to believe.
• The $250 million a year that the Transportation Finance Advisory Committee suggested was needed to “maintain” our state roads and bridges, has now, just two years later, become $400 million, according to the governor’s recent statements.
• The $210 million a year that the TFAC said would be needed to build out the vast Twin Cities transit system has now increased to $280 million, according to the governor.
• This same metro-area transit map that the TFAC suggested could be built in the next 20 years — only if we increased the metro-area sales tax by half a cent — apparently can now be completed with current revenues in the next 10 years, according to planning documents from the Counties Transit Improvement Board and the Metropolitan Council.
Once we agree on the priorities, then we do need to get real about funding. Just like the governor, the Star Tribune Editorial Board endorses a well-meaning but outdated solution (“Take the long view on transportation,” Jan. 10).
We’ve long relied upon dedicated revenues to pay for transportation infrastructure. Funding must be broadened to keep pace with rising costs. The Legislature should pass a 10-year plan that is funded through efficient use of current resources, general-fund appropriations and value-capture mechanisms.
Revenue from the gas tax has been declining in value with more efficient and more electric cars. And the current user fees — fuel taxes, vehicle registration fees and the motor vehicle sales tax — do not capture any money from those who use the system but will never buy or operate a vehicle.
Advocates are proposing a new gross-receipts tax on gas — assessing the 6.5-percent sales tax at the wholesale level. This proposal has multiple flaws. First, the tax is not transparent to consumers. Second, the assessment would result in significantly higher prices at the pump and would put Minnesota among the top fuel-taxing states in the country. Third, projected revenues are far from stable. At gas prices of $2 per gallon, the tax would increase the cost at the pump by about 12 cents. At $4, prices would go up by more than 25 cents per gallon. The governor’s current proposal is based on gas at $3.25 per gallon.
We need to invest in a way that does not make our cost of doing business any less competitive than it is today. Many other states are just now debating gas tax increases, while Minnesota raised its gas tax less than 10 years ago. The most recent increase happened in July 2012. We also raised significant sales, income and corporate taxes to the tune of $2.1 billion less than two years ago.
The debate should not proceed without first asking: Are other government services, like health care, any less long-term and in need of stable funding than transportation? If the answer is “no,” then why is it appropriate to fund health care services with general-fund dollars but not transportation? The idea might be new to Minnesota, but 33 states use money from the general fund to supplement financing for state roads and bridges.
Using the general fund also may trigger scrutiny and potential reform of other programs. Everyone will have to redouble efforts to redesign the delivery of state programs and services.
We should be exploring new funding mechanisms like value capture, too. The University of Minnesota’s Center for Transportation Studies offers some excellent guidance. Current research shows that matching a portion of a project’s cost with those who most directly benefit can contribute significant dollars.
Let’s put transportation funding in perspective. When asked about the most important services for the state to provide, business owners and managers usually say education, public safety and transportation. Yet, outside of small annual appropriations for transit, transportation does not show up on the balance sheet of the state’s general fund.
The Minnesota Chamber of Commerce supports a new 10-year investment plan, but — news flash — we’re talking 2016 to 2026, not 1966 to 1976. The Dayton administration and the transportation special interests are the ones who need to “get real.” First, let’s have a meaningful conversation to reach consensus about what we need to invest in over the next decade. Then, and only then, let’s get practical — and creative — about how to fund it. Our goal is a transportation system that facilitates a changing and growing economy. We need an investment and funding strategy that’s up to this task.
Scott Brener is senior vice president and general counsel at SFM, Bloomington, and chair of the Transportation Policy Committee at the Minnesota Chamber of Commerce.