Taking the “Transit” Sales Tax Statewide

As I write this, the 2016 Minnesota legislative session is coming to a close, and last-minute discussions are taking place to try and sort out transportation funding. One of the major options is the possibility of a 0.5% metro-area sales tax for transit, an increase from the 0.25% currently collected for the Counties Transit Improvement Board. This is partly to finance the Southwest LRT project, which is currently facing a $135 million funding gap. CTIB currently collects $110 million per year, and the increase would bring the funding level to $280 million annually (if it included all 7 counties rather than the 5 that are currently members).

Pie chart of MnDOT funding sources and uses

MnDOT handled $3.28 billion in funds in 2015, with about $1.3 billion spent on the trunk highway system and another $1 billion sent to counties and cities for local projects.

That’s a significant improvement, but still pales in comparison to the annual amount of money put into roadways. In 2015, MnDOT funneled $3.28 billion in funds. That included about $1.3 billion on construction for roads and bridges on the state trunk highway system, plus another $1 billion handed over to counties and cities for the County State-Aid Highway (CSAH) and Municipal State-Aid Street (MSAS) programs.

When discussing transit funding, it’s common to get bogged down talking about operational costs, even though that is measuring something completely different than the capital spending that dominates the cost of roadways. MnDOT doesn’t actually move anyone—they just provide the infrastructure that allows people to move themselves, mostly in cars that are privately owned. Capital spending by transit agencies tends to be fairly low, and it’s often dominated by the cost of vehicles and maintenance facilities, with little left over for any actual infrastructure in the ground. New rail projects have all-inclusive budgets that seem high because they count guideways, vehicles, stations, maintenance facilities (which double as parking for transit vehicles), power supplies, and miscellaneous other items.

Given all of that, it’s really unsurprising that the mode share for public transportation is very low across the country, and only modestly better in most larger metro areas.

But wow, wouldn’t that be different if we balanced the amount of spending between different modes? What if we had the money to fund the tunneled and/or elevated lines that would allow denser parts of the Twin Cities to have good transit service? What if we built on the concept of the metro-area sales tax and took that statewide?

This topic has come up over on the streets.mn forum, with a few different ideas tossed around, and some more thoughts have bubbled up as we now watch Denver open several new lines this year, starting with the new A Line commuter service to their airport.

The Twin Cities region has long struggled to fund desirable projects, and it has been especially difficult to get lines with good routings to serve the densest and most populous parts of our region. Minneapolis, which generates the largest number of transit trips of any city in the metro area, is only expected to be served by a limited number of new light-rail stations on the Blue and Green Line extensions.

Of course, if we had a steady stream of $1 billion per year like the trunk highway system does, what has been impossible in the past due to complex federal funding rules would now be far, far more practical. It would be easier to do the logical thing and upgrade Metro Transit’s busiest routes.

Map of possible passenger rail lines from the 2010 state rail plan

Statewide passenger rail projects, like these from the 2010 state rail plan, remain completely unfunded.

If we took the funding stream statewide, it would also help transit service in smaller cities, and could fund the restoration of passenger service on current and former freight rail corridors across the state, not to mention a conversion from diesel power to quieter, cleaner, and more efficient electric power. This would make it so “transit” isn’t just something for large cities, but also a system for connecting all corners of the state. Most towns in Minnesota were built up along rail corridors, so it would make sense to link them together again. MnDOT has struggled to make progress on the estimated $95 million second daily train to Chicago, a project that should have been implemented years ago. That project and MnDOT’s state rail plan are things that could be built up in no time if we treated public transportation the same way we treat highways.

Denver’s metro-area transit system is funded with a 1% sales tax, double what is currently being discussed by legislators. Minnesota has a pretty large economy, with a gross domestic product of $317 billion in 2014. Each percent of sales tax from that year brought in about $740 million in revenue. Surprisingly, my hypothetical target of $1 billion isn’t that far off. If we wanted to do this, we could.

Are either of those figures the right amount to spend on public transportation in our state? For our present situation, where highway funding has been leagues ahead of what we’ve gotten for transit decade after decade, it basically seems too low. We can’t flip the switch tonight and have a fully built-out statewide system tomorrow, but with issues like climate change lurking, and a possible flip from growth in the sprawling suburbs back into the city grid, I feel like we need all the investment we can get.

About Mike Hicks

Mike Hicks is a computer geek at heart, but has always had interests in transportation and urban planning. A longtime contributor to Wikipedia, he started a blog about trains and other transportation after realizing it had been two decades since he'd first heard about a potential high-speed rail line from Chicago to Minneapolis. Read more at http://hizeph400.blogspot.com/