Transit survives cutback scare

The predictions were dire: Twin Cities bus and rail fare hikes as high as $4 and a dramatic loss of riders.

But transit officials dropped threats of fare increases and service cuts as quickly as ink dried on a budget deal that cut state general funding for transit by 40 percent.

The quick reversal this week renewed suspicion by some critics of the Metropolitan Council that it had enough money to keep transit rolling without drastic measures, even with reduced state funding.

"They were overplaying their hand and being the drama queens," said Rep. Mike Beard, R-Shakopee, chairman of the House Transportation Policy and Finance Committee.

The Metropolitan Council defends its contingency planning as valid because earlier versions of a transit bill called for even greater cuts in state funding than what was finally enacted.

"This was not drama," said Met Council Chair Susan Haigh. "This was real."

The funding package approved this week in the special legislative session provides $78 million in general fund money to Metro Transit over the next two years -- a reduction of $52 million.

"That absolutely would have required fare increases and significant route reductions," Haigh said.

Instead, the legislation approved this week calls for the agency to cover the $52 million loss in operating funds in other ways. It will tap $15 million in special sales tax money that five counties have raised to expand transit. The agency will also withhold state motor vehicles sales tax money from suburban transit carriers with budget surpluses, trim administrative expenses and tap about $3 million of roughly $50 million in transit reserve funds.

During the 20-day government shutdown, the Met Council drew on its transit reserves to replace losses of general fund money and state tax revenue on motor vehicle sales.

The council asked its financial planners to estimate how long the buses and trains could keep rolling on reserves during a shutdown. The answer: six to eight weeks.

"We assumed we could go a couple of months and be okay," chief financial officer Wes Kooistra said Friday.

Raising fares for additional revenue wasn't an option during the shutdown because a lengthy public hearing process would have delayed any increase until 2012.

But Met Council officials warned people at a hearing in July that it was considering fare hikes of 50 cents and a 25 percent reduction in bus service next year in response to a reduction of $109 million in state funding. The GOP-led Legislature approved the cuts but DFL Gov. Mark Dayton vetoed them before the shutdown.

In March, Haigh had warned that a $120 million state funding cut then under consideration could lead to a $4 fare increase, bringing total fares to at least $5.75.

The more modest cuts approved this week have put off the crisis, she said.

"We really are not anticipating any fare increase or service reduction in the next 12 months," Haigh said.

"I think all things should be considered when you're trying to run an effective and efficient bus company," he said.

Shifting sales taxes

A key element of the transit deal involves diverting $15 million of the $180 million raised by a quarter-cent sales tax in five metro counties from transit expansion to transit operation.

Hennepin County Commissioner Peter McLaughlin said Friday that the shift is a "travesty" because it violates the purpose of the sales tax to help build new rail and bus rapid transit.

McLaughlin oversees the Counties Transit Improvement Board, which distributes the sales tax revenue collected from Ramsey, Anoka, Dakota, Washington and Hennepin counties.