Increased Transit Funding Can Save You Money

The legislature is buzzing with transportation funding proposals. The Republican plan proposes no new revenue streams while the DFL plan contains a variety of tax and fee increases to pay for system fixes and expansion.

One point of contention is the DFL’s proposed one percent metro area sales tax to raise money for transit. Republicans and allies like the Minnesota Jobs Coalition balk at the idea, claiming it will put undue pressure on the middle class.

But a one percent sales tax could actually save many middle class metro residents hundreds or thousands of dollars a year and improve everyone’s quality of life.

I think about paying taxes to fund transit (or anything, really) like paying for any other good or service – we should consider what we get for our investment. What does a one percent sales tax cost the average metro citizen and what does that citizen receive in return?

A possible map of our future transit system, only possible in an "Increased Revenue Scenario" according to the Met Council's 2040 Transportation Policy Plan.

A possible map of our future transit system, only possible in an “Increased Revenue Scenario” according to the Met Council’s 2040 Transportation Policy Plan.

The DFL plan will cost each metro-area resident an average $90 per year, not a totally insignificant amount of money. So what do we get for it? We get improved transit services that might make it possible to downsize from two cars to one, or even from one car to none if we live in an area well served by efficient transit.

Getting rid of a car can save people a lot of money. According to AAA, the average annual cost of owning a car in 2014 was $8876. The most expensive unlimited transit pass you can purchase from Metro Transit comes to $1362 annually. This means if you can swap a car for an all-access unlimited transit pass you can save more than $7000 per year. For just $90.

Even metro taxpayers who cannot make the switch to transit save money if transit improves because other people switching to transit lowers overall congestion. Congestion costs each individual Twin Cities driver $695 per year in fuel costs according to the Texas A&M Transportation Institute (this is a 2011 number, their most recent data). Slightly reducing congestion can dramatically increase speeds and save fuel – we have all seen this happen when highway speeds leap after passing one small exit.

Additionally, any increase in transit use reduces pollution in the air we breathe and lowers our greenhouse gas output. This lowers non-transportation costs, like healthcare spending, and helps make people’s everyday lives better.

Paying $90 per year to increase transportation choices and ease congestion in our region is worth it. I would argue it is worth paying even more in the short term. The faster we can build a quality transit system, the faster we can make people’s lives better by saving them money to spend on local goods and services instead of foreign oil and cars.

Transit funding cannot be spent willy-nilly, however. Drivers will only be willing to switch to transit if it is fast and goes places people want to go. This means investing in a network that serves dense areas of housing and employment where maximum numbers of people can get out of their cars and onto transit. It means investing in transit where people can walk or bike to the line instead of driving to a park-and-ride.

Governor Dayton just appointed Adam Duininck as chair of the Met Council board, the institution that governs Metro Transit. Duininck is a transit user and understands smart transit investments. Here’s hoping he has money to make those investments.

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29 Responses to Increased Transit Funding Can Save You Money

  1. Walker Angell
    Walker Angell January 20, 2015 at 8:26 am #

    Sam, great post. Two concerns that will be raised:

    – Will that extra revenue actually result in improved transit and in enough improvement to be worth it? What has our history been with this? Does this differ from road spending?

    – Cost shifting. Why should everyone have to pay for the few who use transit? Instead, raise the cost of the passes. Of course, why should everyone pay for those who use roads. Instead, raise the fuel tax. How do these compare?

    • Sam Rockwell
      Sam January 20, 2015 at 3:51 pm #

      Walker,

      To your concerns:

      (1) I do not know if transit funding would be spent in the right way. I certainly realize that transit spending in Minnesota has been mediocre and have written about that here and elsewhere (along with half the streets.mn writers and readers). I do know, however, that our current transit system needs serious upgrades in shelters, signage, number of vehicles, dedicated lanes, signal priority systems, etc., and that all these things take money. Currently, most of these things are pie in the sky wishes because there are not enough funds available. That is a long way around saying that I share your concern….

      (2) I cannot imagine a political scenario in which the general populous does not pay for roads so I’m skipping that question (as a non car owner I would be happy to take the tax break, however).

      Regarding the fairness of non-transit-users paying for transit my thinking is as follows: What do we really want when we ask for new roads or more lanes? We are not really asking for more concrete — we want less congestion, faster commute times. Roads can accomplish this, but so can transit if transit redirects existing or new users from roads. I do not know what the dollar comparison is (ie whether transit congestion relief costs more or less that road expansion congestion relief). However, I do know that more roads cause more people to drive which has more negative externalities than transit (inactivity, air pollution, climate change, impervious surfaces, etc) — these externalities should be taken into account in any cost comparison.

      • Adam Miller
        Adam Miller January 20, 2015 at 4:04 pm #

        I’m not at all certain that roads can accomplish less congestion and shorter commutes.

        But I like the way you framed transit as offering that possibility, at least in terms of speaking to people who view government’s function as providing things for themselves.

  2. Walker Angell
    Walker Angell January 20, 2015 at 8:32 am #

    I’d love to see some effort put in to providing better bike/transit connections. The new park & ride in Maplewood is nearly inaccessible by bicycle. Same for the new one on 35E & County E in Vadnais Heights. I’d bet a decent number of people who use these live within a mile or two and could very easily ride bicycles if they had safe places to ride.

    We need a web of well designed segregated bikeways going out from each major and many minor transit stops to provide for this.

    Edit to add: Also, it seems the company that serves the area south of the river had begun a program to increase the number of people bicycling and was even providing assistance in purchasing bicycles.

  3. UrbanDoofus January 20, 2015 at 9:49 am #

    Interesting article. I don’t have a lot of faith that the extra cash will improve transit to the point where I can ditch my car and take a bus to work. You still need to live in very specific areas in the cities in order for transit to make sense. An hour commute each way doesn’t make sense, even though it may make urbanists happy.

    Interesting idea about biking. I’m in favor of increased bike paths in general, but it’s a hard sell considering that the average can’t/won’t bike all year round. Buses and trains can be used all year round.

    • Matt Brillhart January 20, 2015 at 11:06 am #

      “You still need to live in very specific areas in the cities in order for transit to make sense.”

      Close, but I think the more correct statement is that you need to *work* in very specific areas in order for transit to make sense. Our express bus network serves nearly the entire 7-county area with park & rides. But if you don’t work in either downtown or a few LRT stops away from downtown via the Green Line (e.g. U of M), then transit is probably not your best option.

  4. Adam Miller
    Adam Miller January 20, 2015 at 9:56 am #

    Of course, there are very few elected Republicans within the metro area, so this may come down to whether outstate legislators let us tax ourselves to buy things we want.

    • Wayne January 20, 2015 at 11:18 am #

      They won’t. They enjoy playing vindictive games with the metro.

  5. David January 20, 2015 at 10:19 am #

    can the governor and split MN Legislature strike a grand bargain on this btw metro DFL and outstate Repubs? let metro 1% sales tax, shift some MnDOT funds outstate? if we look to Denver’s RTD and what the 1% metro sales tax has done for transit in 10 yrs or so it is remarkable; Twin Cities should emulate that.

    • Matt Steele
      Matt Steele January 20, 2015 at 1:48 pm #

      Not sure we want to emulate *how* Denver has spent their transit capital dollars. Most of their projects are extremely low value especially given the cost.

      • Wayne January 22, 2015 at 10:00 am #

        If they keep insisting on trains through parks, we’ll do a pretty good job emulating how Denver has made questionable decisions.

  6. UrbanDoofus January 20, 2015 at 10:50 am #

    Adam raises an interesting point. Why would GOP members have a problem with us taxing ourselves for things we want? Aren’t they the party of local/self governance?

    • Matt Brillhart January 20, 2015 at 11:02 am #

      This is the question we should all be asking of the GOP (and greater MN in general): “Why won’t you let us tax ourselves?”

      I’d even be willing to put it to referendum in each of the 7 metro counties, if that would help the legislature pass the bill. I feel confident enough that Hennepin & Ramsey Counties could pass the referendum – don’t really care about the rest. The current .25% sales tax is enough for Anoka, Dakota, & Washington. It’s not like they’re getting rail anyways, and I think everyone would agree we shouldn’t rush to build the next Red Line or Northstar.

      • Joe January 20, 2015 at 11:12 am #

        1) They oppose the idea of taxes in general
        2) Out-of-staters buy a lot of things in the metro, come up for sports games, the MOA, etc. and they would be paying the tax

        Those aren’t good reasons, and I support the tax, but at least with part 2 there, they do have a little bit of a point

        • Adam Miller
          Adam Miller January 20, 2015 at 11:16 am #

          They also don’t want us to have the things we want and/or risk that people might get something they value from government.

          • Wayne January 20, 2015 at 11:20 am #

            This. If they continue to subvert government to the point where everyone sees it as something useless and wasteful more people might be fooled into voting for them. Or so I’m guessing their line of reasoning goes.

  7. Sam January 20, 2015 at 11:40 am #

    I’m not convinced that our transit is as bad as some would claim. Are there a lot of areas for improvement? Sure. But most the improvements I see don’t seem like they’d really encourage more people to ride, rather just make us current riders happier.

    I can only speak for myself, but when I lived in the suburbs, the thing that kept me driving was the limited runs out to the park-and-rides in my area. What if I needed to leave work in the middle of the day? Not possible. What if I wanted to stay late for happy hour? Not possible. What if there was a crisis at work and I needed to stay late? Not possible. IMO, express service to the suburbs needs to be improved to run mid-day and evenings, even if they just have 1 or 2 busses running off-peak. Now that I live in SW Minneapolis, I take transit to DT St. Paul every day, even though it takes double the time as driving, I love the flexibility and options I have. I’ll never be stuck without a way to get home.

    Additionally, I’d love to see MVTA/SouthWest Express combined into Metro Transit. I think this would make the system easier to use and also let Metro Transit operate some profitable routes. I find these companies so annoying, and I’m not even sure why they exist. Does anyone know?

    • Joseph Totten
      Joseph Totten January 20, 2015 at 10:38 pm #

      Since no one else has jumped on this yet… here is a basic history of MVTA/SW/Plymouth/ MapleGrove transit providers…

      Back when they implemented a property tax levy for the support of the transit system, it was politically or legally unfeasible to ensure everyone used the same system. So outlying districts were given the opportunity to opt-out. If they felt as if they were not getting enough value from being a part of what would become MetroTransit, they could opt not to pay into MetroTransit and instead pay into their own transit systems. So then it gets weird… some places chose to opt-out and make MVTA/ Southwest, some places chose to opt-out… and then opt back in… not 100% why, but it seems like they were just flexing as if to say “now you better give us the express buses we ask for because we will leave again.” Overall these services usually focus much more on express needs than MetroTransit, but that’s also because they mostly are in these outlying districts, so they’re just serving demand.

      As for adding a few extra express buses, that could definitely be a thing. I doubt that every aBRT line would be built, much less every transitway with a 1% sales tax alone. This money will likely end up in service as well, and adding those buses can be a boon to peak ridership. So I think that some more flexibility for commuters would also be expected.

  8. Matt Steele
    Matt Steele January 20, 2015 at 1:52 pm #

    While it’s true we don’t have enough money, the bigger truth is that we’re wasting our money on the wrong things. Look at what CTIB has funded (with sales tax that’s theoretically for transit projects)… a Red Line which was mostly a capacity upgrade and removal of conflict points for Cedar SuperStroad through Apple Valley and Lakeville. And now $10 million for a freeway interchange on Hwy 10 in Ramsey that has zero transit value. Even the things that have actual transit value have low transit value… P&R expansions, etc. Even our transit planning revolves around a car-only mindset. Granted, it could be worse… that extra sales tax could be going towards a new stadium or two. But the idea of increasing a regressive tax to pay for regressive outcomes seems doubly non-progressive to me. Why don’t we demand better and more progressive outcomes?

    • Walker Angell
      Walker Angell January 21, 2015 at 10:59 am #

      Matt, I agree completely. How do we change this? Are we changing it?

  9. Monte Castleman
    Monte Castleman January 20, 2015 at 6:59 pm #

    One thing to think about is that people that want to use transit may already be finding jobs and homes near transit, so increasing transit may have diminishing returns.

    • Joseph Totten
      Joseph Totten January 20, 2015 at 10:44 pm #

      I would counter with the following,

      It may be that currently this self-selection is playing out, but what of when I have kids (granted it’s a ways out), what of commuters like Sam above? When we live in certain areas why can’t we want it all (if we are willing to pay for it)? Why can’t we spread the wealth? Why can’t we mix people who take transit and don’t in the same neighborhoods and jobs?

      Also, isn’t this about creating a full network that businesses want to bring both white collar educated young folk (millennials) and blue collar (transit dependent) people to their outlying (cheaper) workplaces? Having the option of transit is important to attracting all types of labor a business needs to succeed.

    • Walker Angell
      Walker Angell January 21, 2015 at 11:01 am #

      I’m not so sure. We have been a car-centric society for several decades and many people think or have thought that driving by themselves in a car is the primary and nearly the only option. I think that’s changing and that more and more people are considering alternatives including transit, bicycling, and walking that they would not have considered 10 years ago.

      Network is important as well (for transit and bicycling). If I can only go 90% of the way via transit I may choose my car but once that final piece is in place transit suddenly becomes viable.

    • Sam Rockwell
      sam January 23, 2015 at 8:48 am #

      I would also counter with the following personal anecdote: I am one of those people who wants/needs to use transit and I live further from a transit hub than I would like because my family could not afford to live immediately adjacent to the transit hub. We sought to live close to Lyndale and Lake where we would be walkable to all necessities and social facilities and would be next to high frequency transit service going north/south and east/west. However, we live over 1/2 a mile (a classic walk shed) from that east-west service and from a comprehensive grocery store. We make well over the median household income.

      This is only to say that many of the homes that are in walkable neighborhoods and near reliable transit are perhaps out of reach financially for people who seek that kind of location.

  10. Mary G January 21, 2015 at 1:11 pm #

    Does the $90 per “metro-area resident” include children or just adults? If it includes children, then a four person family would pay $360 which takes even me aback. And I totally support the tax.

    • Sam Rockwell
      sam January 23, 2015 at 8:27 am #

      Mary — the $90 figure is just an average and is very unscientific. I took the total amount of money the DFL said the tax would generate annually ($250M) and divided that by the population of the 7 county metro area. So my average includes children. However, because the tax is a sales tax, the actual amount any person pays is tied to the amount of sales taxable items he or she purchases. So if a kid is purchasing $9,000 of stuff per year, they will end up paying $90 in taxes. But remember that clothing and food is not taxed.

  11. Matt Brillhart January 21, 2015 at 3:31 pm #

    A. Out of curiosity, how did they arrive at the $90/year figure? I assume that is a combination of increased gas tax and the extra .75% sales tax for transit. I also assume those figures do not include the amount people are paying currently for either gas tax or transit sales tax.

    If you’re a non-driver (or drive a very tiny amount, use Car2Go, etc. – i.e. don’t pay much/any gas tax) you would have to spend $1,000 monthly ($12,000 annually) on taxable goods to hit that $90 figure (90/.0075). That $1,000 in monthly spending is on top of grocery and clothing purchases, as those items are non-taxable. Unless you’re buying new furniture or appliances, that $12,000 annual figure seems kinda high for average individual spending on taxable goods, at least from my frugal viewpoint with a salary in the low-mid forties. The poor are obviously spending much less than that. Maybe it’s because I’m a renter and don’t have to make any big purchases like home repairs or appliances?

    B. It really stinks that we weren’t able to spread the current sales tax to clothing and services (haircuts, tattoos, etc.), while lowering the rate to 6.0% instead of 6.875%. The Senate got close to making it happen in 2013, but Gov. Dayton pulled his support and the whole reform package fell apart before there could be a real discussion on its merits. The implication to transit is that the existing .25% sales tax would also have been extended to clothing and services, automatically increasing transit funding two years ago without a direct political fight over it. Had that happened in 2013, today we might be talking about increasing it by just .25% instead of the whopping .75% increase.

    • Sam Rockwell
      sam January 23, 2015 at 8:40 am #

      Matt — I do not know how they came up with the number but I have a guess.

      First, I generated the $90 average by dividing the amount the DFL says the tax will generated by the population. Therefore, the $90 per person is not additional transit-dedicated sales tax (ie that attributable to the .75% increase) but instead total transit dedicated sales tax (the old .25% + the proposed .75% increase). So this lowers the amount of spending necessary to generate the revenue.

      I initially did a more involved calculation to determine how much the tax would cost citizens. I imagine the DFL did a similar calculation. I took the Bureau of Labor Statistics consumer expenditure survey data (http://www.bls.gov/cex/) and pulled out all categories of spending that were eligible for sales tax. I then took one percent of this number and got roughly $180/year in taxes (ie $18,000 per year in sales tax eligible spending). However, these data are household data, not data on individual spending. This would mean there is an average of two people per household, which seems about right (the numbers don’t fully add up because the BLS data are national data, not MN or metro area data).

      So that’s my guess.

  12. Dennis January 24, 2015 at 5:03 am #

    One billion dollar on the GreenLine which is slightly faster than the #16 bus.The Northstar is another waste of money with it limited services at least the express to Anoka operate all day even 3 trips at nite.Red Line s averages less than1000 riders/day.The Greenline extension will run thru a park instead of Uptown.The Transit Hubs are waste of money and time Chi/Lake Hub adds time to the busy schedules The Uptown hub is the only convenient one that does add cost and time.Dakota Co should have plan for LRT down CedarAnoka Co LRT down hwy 65.LRT down 35w.Its costly but will get more people out of their cars .This area has an abundance of hwys and with low density the current project s are not viable.Mpls and St Paul c an start by removing the high parking requirementThe state Capitol area workers get free parking even buying more land for parking and using greenspace .Eliminate some the free parking the city offfer to lowincome people downtown.Spend the money wisely on viable projects that attract riders to justify building them.

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