How Pawlenty's veto impacts transit

'Green' bus
Hybrid electric buses such as this one are being introduced by Metro Transit in the Twin Cities.
Photo courtesy of Metro Transit

Dozens of cities and counties around the country, some for as long as three decades, have had local taxes dedicated to transit.

As a result, many of those communities -- Denver, Phoenix, Houston and Seattle to name a few -- have had better luck attracting scarce federal transit dollars.

The federal government is clear in its preference for giving money to communities where there's a local commitment.

Light rail line
The Hiawatha light rail line opened in 2004, linking downtown Minneapolis with the Twin Cities airport and the Mall of America.
MPR file photo/Art Hughes

Transit advocate Lea Schuster, the executive director of the St. Paul-based Transit for Livable Communities, says when the Twin Cities applies for federal matching funds for transit, it doesn't have the advantage of being able to cite a dedicated source of local transit funding.

"Up to now the answer has been no, and that's hurt us," says Schuster. "If this passes we'll be able to say yes, and that'll make us a much stronger competitor with these other cities."

The quarter percent -- or one-fourth of a penny on the dollar -- sales tax proposal in the transportation bill would work this way.

It would give county boards in the Twin Cities the option and the authority to levy the extra sales tax, on top of the 6.5 percent sales tax already on the books.

Metro Transit bus
A Metro Transit bus makes a stop in downtown St. Paul.
MPR Photo/Bob Collins

If county commissioners approve the additional levy, county taxpayers would not have a direct vote on the tax increase.

Rick Krueger is director of the Minnesota Transportation Alliance, a statewide transit lobby group which supports the transportation bill and the transit tax provision.

Krueger argues voters make their views known through their elected representatives, in this case their county commissioners.

"This is not taxation without representation," says Krueger. "They've elected those local county officials, and in fact, they determine what needs to be done and whether or not any particular county in the metro area wants to join in."

If all seven Twin Cities metro area counties approve the quarter-penny sales tax increase it could raise up $114 million a year, all of it for transit.

The power of deciding how to spend that money would reside in a "joint powers" board.

Lea Schuster of Transit for Livable Communities says the board would not fund transit projects of its own design, but would instead make grants based on the Metropolitan Council's transit plan for the Twin Cities.

"The JPO itself would also include the chair of the Metropolitan Council as a voting member," says Schuster. "And the grants committee would set a process and designate certain grant monies, all to be used for transit that would go to a variety of agencies, the Met Council itself, the counties, the county rail authorities."

The transportation bill also includes money for transit projects outside the metro area, by imposing a sales tax on leased vehicles in Minnesota.

That money, along with constitutionally dedicated revenue from the motor vehicle sales tax, would add up to an additional $58 million for rural transit over the next 10 years.

Chuck Lucken, the city administrator for Fosston, a city of 1,500 in northwestern Minnesota says transit needs there are growing.

Lucken says a 13-passenger Fosston city bus supplies up to 23,000 rides a year for residents.

"Ninety percent of those riders are people over 65 years old, so it's really critical to the ability for these people to get to the doctor and get to the grocery," says Lucken.

But the Fosston bus service, Lucken says, hangs by a $75,000-a-year shoestring of state and federal grants. He's worried the state's projected revenue shortfall and a cut in local government aid could harm rural transit service, at a time when the population increasingly needs it.

Opponents of the transportation bill point to the higher taxes it creates.

The effect of the transit tax -- the quarter-penny sales tax increase -- would cost the average Twin Cities family about $40 more a year.

Augsburg College economics professor Jeanne Boeh says a typical Minnesota household already pays 16 percent of its income in state, county and local taxes.

The question, to which she says no one has an answer, is -- what is the right level of taxation?

Minnesota, she points out, doesn't have the advantages of states like Nevada or New Jersey, where tax revenue from big-time gambling helps lighten the burden on individual taxpayers.

"If taxes are too low, if you don't have good services that people expect, if you don't have good schools, if you don't have good roads, you won't grow, you won't grow as a state, your income won't grow," says Boeh. "But if it's too high you also won't grow, because you're competing against other states who have all those services with lower taxes."

If legislative leaders fail Monday in their bid to override the governor's veto of the transportation bill, there are still proposals in the bonding bill to partially fund Central Corridor light rail and several other Twin Cities transit projects.

However Metro Transit, the public bus and rail service, gets most of its money from the general fund.

If lawmakers reduce the growth of state spending in light of projected revenue shortfalls, Metro Transit might have to raise fares and cut service without a guarantee of new revenue from the transit tax.

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