Funding change worries suburban transit systems

Len Simich fears that local control of suburban transit service is slipping away.

After a year of meetings with the Metropolitan Council about bus purchases, fleet needs and transit funding, Simich, the chief executive officer of SouthWest Transit, says the regional planning agency is "over-regulating and micromanaging" and pursuing policies that "tie our hands" and undermine suburban transit success.

"We have been able to grow all along, and SouthWest was the fastest-growing system in the state for a number of years," Simich said.

Now, SouthWest, which serves Eden Prairie, Chaska and Chanhassen, can't afford to grow because of the way the Met Council is dividing state transit dollars, Simich said. "All the money flows through them, so they control us through the purse strings."

SouthWest is concerned enough about the trend that it plans to discuss it, along with other issues, during a "summit" with city officials from its service area on Wednesday.

Freedom from centrally controlled transit purse strings was a driving force behind a suburban transit revolt in the 1980s, when the cities of Plymouth, Maple Grove, Chaska, Chanhassen, Shakopee, Eden Prairie, Burnsville, Eagan, Apple Valley, Prior Lake, Savage and Rosemount all withdrew from metro bus service focused on the central cities and redirected their property taxes to bus services of their own.

Growing through the 1990s and into this decade, SouthWest Transit, Minnesota Valley Transit, Maple Grove Transit and Plymouth Metro Link built transit stations, bought buses, sparked transit-oriented development and attracted a new wave of suburban riders.

In 2006, Minnesota voters went even further and amended the state Constitution to dedicate 100 percent of motor vehicles sales tax revenues to roads and transit. Since then, that money has flowed to a fund administered by the Met Council.

And the council has assumed responsibility for dividing up the money -- to the surprise and discomfort of suburban transit officials who feel they are getting less than they deserve based on their service and results.

Tax receipts disappointing

Since 2006, car sales have plummeted and transit funding has grown scarcer and less reliable. In fiscal year 2009, the tax brought in about $123 million for metro-area transit -- $5 million less than in 2004 and far below the $160 million that would have been expected if receipts had kept up with inflation, according to the Met Council.

"It is not performing the way anybody thought it would," Simich said. "With the economy the way it is, it's not going to turn around anytime soon."

"It's an extremely tight budget environment," said Metropolitan Council Chairman Peter Bell. "It's hard for me to overstate how tight it is."

For that reason, Bell said he is meeting with suburban transit officials to agree on how discretionary money should be awarded. He would even like agreement on how often buses should be replaced to make spending more uniform.

When suburban systems relied on their own property taxes, they "did have a fair amount of autonomy," Bell said.

After the shift to the motor vehicle sales tax, the suburbs were guaranteed that they would receive 17 percent of the new tax proceeds -- the same percentage they had had of the metro property tax.

The Met Council, however, decides if the suburban systems will receive any money beyond that base funding.

"I want to honor their autonomy" when they use their base funds, Bell said. "But I don't feel obligated to give them the same autonomy with their expansion dollars."

Bell said money for growth should be allocated to the greatest need around the metro area. And he noted that Metro Transit provided about 82 million rides in 2008 while the suburban systems together provided about 4.4 million rides.

'Conflict of interest'

Beverley Miller, executive director of the Minnesota Valley Transit Authority, questions whether the Met Council can impartially divide expansion money when it is the operator of Metro Transit.

"I think there is a conflict of interest," she said. "It's hard to serve both sides."

As a result, Minnesota Valley now has "less than two months of an operating reserve," Miller said. "That is very uncomfortable."

Whether transit is being governed efficiently and effectively will be examined by the state auditor's office this year. The audit likely will look at local vs. regional control, said audit manager Judy Randall.

Bell said "constrained resources makes everybody a little more on edge." He's urged suburban transit officials to "take a deep breath, participate in the audit report and wait until it comes out. Then we can look afresh."