A Back-Of-The-Napkin Proposal For State Transit Funding

After a midterm election that saw DFL candidates sweep the statewide offices and make massive gains in the suburbs, transportation funding is in the air once again in St. Paul. To mark the occasion, a coalition consisting mainly of business groups has assembled to push for more money to go to transit. The group, which is named “Keep MN Moving”, is looking to forge a bipartisan consensus on transit funding. While avoiding taking a position on any of the likely flashpoints this session, like a possible gas tax increase, the coalition does seem to believe there’s a deal to be brokered in which funding is jointly found for Greater MN transit and some of the less costly Twin Cities priorities.

To be clear from the jump, it’s definitely a good thing that Keep MN Moving was formed, it’s a good thing that transit is being pushed to the forefront of the legislative agenda, and it’s a good thing that business leaders see transit as an issue worth committing political capital to, instead of, say—lowering their own taxes. But the deliberately vague goals of the effort and the nature of the people behind it do raise some points of discomfort.

  1. Greater Minnesota and the metro area have different transit needs and solutions. While transit in rural areas and small cities is extremely important to those who rely on it, it is not as cost-effective in terms of really important metrics like ridership, nor as fundamental to the functioning of a place as transit in the city. Greater Minnesota absolutely should receive transit funding to meet as much of its need as possible. But most of whatever is raised for transit will go to the cities, especially to the densest and most central neighborhoods where the land use is most supportive of transit, and that’s entirely appropriate. In a search for political consensus and compromise, that reality cannot be overlooked.
  2. Not all transit investments are created equal. With the caveat that I know nothing about the individuals behind Keep MN Moving, I feel safe in asserting that the organizations in that coalition are not led by too many daily transit riders. This is also probably the case for the future chair of the Met Council. The Twin Cities, like all but a handful of American cities, have a problem where the people who are in rooms making decisions about transit are not actually riders of transit. This is a problem that predictably leads to decisions being taken that are not always responsive to the actual needs and preferences of transit users or would-be transit users. I appreciate the fact that Keep MN Moving is calling for transit funding and deferring most of the specifics to needs that Metro Transit and other agencies have already expressed. But the mismatch between the political actors setting the amount of funding and the transit professionals deciding where to spend it means there’s a built-in tension that can sometimes lead to disappointing outcomes.
  3. That mismatch also makes it harder to plan comprehensively and aggressively. The Keep MN Moving coalition was just formed this fall for the purpose of this upcoming session. It has not spent years building support for anything in particular, instead it is merely tapping a wellspring of general support for the idea of spending more on transit. There is a chicken-or-egg problem here. In order to set aggressive goals, planners need to know what options for funding are on the table. In order to seek more funding, politicians need to know what they will be funding and why. While cities like Denver, Seattle, and Los Angeles have committed billions of dollars over decades (the latter two more wisely than the former) towards a comprehensive and inspiring transit network, the Twin Cities continue to lurch forward incrementally, corridor by corridor. The current transit coalitions in Minnesota are short term alliances, and not capable of advocating for such a vision.
  4. The three points above are all especially important because, the stakes for transit funding are greater than ever. Minnesota continues to make significant gains in reducing the carbon emissions in its energy sector, and that sector is setting lofty decarbonization goals for the future. However, the state’s overall carbon emissions are barely decreasing, in large part because of increases in transportation emissions. Other agencies and local governments are showing the same ambition as the electric utilities. Metro Transit is planning to shift its entire bus fleet to electric vehicles. Minneapolis just passed a comprehensive plan that will allow denser land uses as a way to reduce per capita emissions, meaning more efficient homes and more demand for transit. The state must act with similar urgency, because funding transit is not just an issue of giving commuters more options, it’s also an essential plank of the state’s strategy for future survival. I’m worried that case is not being made, and the result of whatever is passed in the legislature will not match the scale of the need.

In the past couple years, I’ve thought and written about what my vision for transit in Minneapolis-St. Paul would look like, in terms of a rail and bus network that would compliment and support dense neighborhoods and allow people to use transit for all of their daily travel. I am far from the only person who has lots of ideas about this! With a new DFL administration, DFL gains in the house, a big budget surplus, and multiple reports on the ever-growing crisis of climate change, I’d like to believe that the Keep MN Moving coalition has one thing exactly right; that this is the time for the state legislature to move decisively to back transit.

To do that, however, will still require votes from the transitionally transit-hostile MNGOP in the senate. The framework of the compromise that Keep MN Moving has floated makes basic sense, with money reserved for predominantly-GOP-represented Greater Minnesota as well as the predominantly-DFL-represented metro. It is also clear that transit funding responsibilities need to be devolved as much as possible from the state itself, where it falls in and out of political favor, and placed in the more stable hands of Hennepin and Ramsey counties in particular. This past year, the dissolution of the Counties Transit Improvement Board allowed both central urban counties to raise their transit sales tax an additional quarter percent, which was expected to raise roughly an additional $106 million annually, and help pay for the future Green and Blue line extensions, plus the new Orange Line. But neither county can raise their transit sales tax further without state approval. Establishing a principle that the metro be allowed to pay for it’s own transit has not always carried the day at the legislature, but it is surely the only way forward to allow for the development and enactment of a more ambitious and comprehensive vision. After the DFL’s statewide and suburban sweep, the political moment might be right.

What should a comprehensive and ambitious transit funding ask look like?

There are a number of different types and levels of transit service planned in the Twin Cities, including light rail, highway BRT (hBRT), arterial BRT (aBRT), local bus, and specialized services like Metro Mobility. Of these, the highest priority for funding must be expansion of the arterial BRT (aBRT) network, like the existing A Line, and the C Line opening in 2019. Currently three more routes, named B, D, and E, are planned, with D in line for immediate funding and B and E likely to proceed to construction in the coming years. The D Line should be funded right away, regardless of whether any broader transit funding agreement is achieved. But the first goal of the upcoming session should be to establish a future funding stream for these essential projects, which are cheap to build, quick to plan and design, and effective in increasing ridership.

Here’s some really simplistic math: Imagine setting a goal to build fifteen aBRT routes by 2030. Three routes are already in the works. Let’s assume a cost of $50 million per route (the A, C, and D lines will cost a combined $139 million), for a total cost of $600 for the remaining twelve. A plausible set of routes could upgrade existing local bus corridors that currently carry about 100,000 daily riders. If we assume that the roughly 30% increase in ridership immediately achieved by the A Line is some kind of standard return for an aBRT project (and Metro Transit’s own ridership projections for the current projects anticipate more than that in the long run), this investment of just under $750 million will result in an additional 30,000 weekday riders—equivalent to an entirely new light rail line, and achieved for a lower cost, with far less disruption and heartache, and with rapid benefits as the routes roll out in stages.

The more visible and expensive costs for transit funding in the future will be soaked up by future light rail and highway BRT investments. Already the Twin Cities have committed to the Green Line light rail extension (roughly $1 billion in local money) and the Orange Line highway BRT (roughly $75 million in local money), and work is progressing on the Blue Line light rail extension (roughly $750 million in local money) the Gold Line highway BRT (roughly $250 million in local money) and Rush Line highway BRT (presumably eventually the Purple Line, the cost is uncertain, let’s just say $200 million in local money) projects. Pre-project studies also exist to support planning and engineering of a rail route in the Riverview Corridor (early estimate: $1 billion in local money) and the Midtown Corridor (who knows) as well, which would be achieved if more funding were available. Already, the existing half percent sales tax (which is bringing in about $200 million a year, plus a vehicle registration tax) is mostly committed to these projects, and presumably will be in the future. The total local cost of just these projects is $3.25 billion, or about 16 years worth of sales tax receipts.

Finally, there is the vanilla local bus service that still carries most of the trips in the metro. In this proposed future of aggressive aBRT expansion, the rapid bus service would become the workhorse of the system, with local buses still filling an essential role but losing their plurality of passengers. Keep MN Moving rightly calls for support for Metro Transit’s immediate local bus priorities and for properly funding Metro Transit to avoid the kind of shortfall that led to a fare increase and service cuts last year. But there’s no reason to return to a status quo that was already not good enough. Instead of simply funding the agency, restoring service, or returning to old fare levels, advocates should push further. Transit is the most efficient and cost-effective way to move large numbers of people long distances. Society benefits when more people take transit, and people should get excellent incentives to do so. Even before the changes last year, Metro Transit fares were too high. Transit funding need not mean only expansion. It could also mean a flat $1 fare. It could mean no fare. What would these changes mean for ridership, and how would the cost compare to new rail or bus routes? We don’t know! These discussions should be on the table.

Where can the money be raised?

I promised a back-of-the-napkin-quality proposal to fund transit, and here it is:

  1. Allow Hennepin and Ramsey Counties to raise their transit sales taxes another half percent from the current levels, all the way to a possible full percent, which could raise an additional $200 million a year if fully taken advantage of. Use this money to fund the most expensive “increased revenue scenario” projects, like an expanded Midtown Rail (the existing pre-project study has some good points, but the proposed locally preferred alternative is a parody of a useful transit service), further LRT corridors (Ayd Mill? Northeast?) or a downtown Minneapolis tunnel, and whatever highway BRT projects are needed to gain suburban support (I-380 seems a no-brainer?).
  2. Allow Hennepin and Ramsey Counties to levy their own gas tax to support aBRT expansion. The gas tax figures to be a major sticking point in the upcoming legislative session, especially for outstate legislators. So why not raise the tax in Hennepin and Ramsey Counties, where transit options exist and the tax will feel less like an imposition? And then use the money to quickly beef up bus system?
  3. Guarantee Metro Transit their 2018 fare revenue, and tax ride sharing (Uber and Lyft) at a level estimated to cover the estimated shortfall if fares were reduced to a flat $1. Then, allow the agency to pilot flat $1 fares for a full year and see what happens.
  4. Fund Greater Minnesota transit either through a statewide gas tax or general funding. (Also, fund a serious planning study on taking the aBRT model to Duluth, which is such a linear city that I could easily see a couple high quality trunk lines succeeding there.)

Are these things politically plausible? I don’t know. Are the second and third ideas even legal? I don’t know either! But while Minnesota is talking about funding transit, and given that it’s more important than ever to do so, it’s important to get priorities sorted out, and to leave no potential funding stream off the table. The state has an extraordinary political moment right now at multiple levels of government, and it’s coming just in time to address some massive issues. Can advocates and the legislature rise to the challenge? I hope so.

28 thoughts on “A Back-Of-The-Napkin Proposal For State Transit Funding

  1. Bill LindekeBill LIndeke

    I love the flat $1 fare idea. I have thought about this myself as a great way to boost ridership. I wonder what the ballpark revenue hit would be on that? (especially vs. fare enforcement costs)

    1. Lindsey WallaceLindsey Wallace

      I feel like the $1 fare would need to be paired with enhancements of high use local routes. The #18 bus that I take to work sometimes is typically already packed to the brim. If a $1 fare incentivizes more users (it would probably incentivize me to take the bus more!) then we’ll need more capacity.

      1. Frank Phelan

        Transit is one of the few services that improves when more people use it.

        If there is demand for a bus to run every 30 minutes, and ridership doubles, now it can run every 15 minutes. If the increased frequency leads to even more riders, now it runs every 10 minutes. If the frequency is more than every ten minutes, now I don’t even need to look at a schedule, I just head out the door.

  2. Monte Castleman

    I can pretty guarantee you that any kind of gas tax increase that goes to transit rather than highways is not “politically plausible”.

    1. Walker AngellWalker Angell

      Agree. Nor any gas tax increase at all. I think gas consumption is actually kind of a poor foundation to base usage costs on.

      So, what about a wheelage fee? Based on the weight of the vehicle and for each mile driven on what types of roads. This could be quite exacting in users paying for exactly what they actually use. And result in consumers making better decisions for themselves and the communities they live in and drive through.

      1. Bill LindekeBill Lindeke

        Oh, a gas tax increase is very politically feasible. In fact, Walz campaigned on it, and despite attack ads at actual gas stations while people were filling their tanks, he won handily.

        1. Monte Castleman

          A gas tax increase to fund roads may be feasible.
          A gas tax increase to fund transit or anything else is not feasible.

          There’s enough rural and suburban Democrats that regardless of their personal opinion, realize that a gas tax funding transit would be political suicide in those areas. Can you imagine that attack ads the next election?

          1. Bill LindekeBill Lindeke

            Oh that is not what i meant. the gas tax is constituionally dedicated to roads only. nobody is proposing changing that (though I would if I was in charge of the state).

            1. Monte Castleman

              The author is proposing to change it.

              > Allow Hennepin and Ramsey Counties to levy their own gas tax to support aBRT expansion

              > Fund Greater Minnesota transit either through a statewide gas tax

              1. Brian

                Does anyone think there is any realistic chance of getting voters to amend the constitution to change the gas tax? What driver in Hennepin or Ramsey County would vote to divert gas tax money to transit?

      2. Frank Phelan

        Raising the existing gas tax is levels easier than instituting a mileage tax. Good luck getting people to let a governmental agency have access to the number of miles they travel, which likely will also involve that agency know exactly where they are and when.

        This, despite being incessantly tracked by their cell phones, security cameras on every corner, paying for everything by plastic or on line, etc.

        Additionally, there are forces in this country that are dedicated to eliminating every cent of tax revenue in the country. As gas engines become more efficient, and some vehicles are powered by electricity, tax revenues will drop on a relative basis. Just by keeping the status quo, the no tax ever crowd is gaining every year, when coupled with the fear of government tracking. This is no small part of road and transit funding.

  3. Matt SteeleMatt Steele

    I’ve heard from multiple insiders that any funds from any gas tax increase are expected to follow the constitutional status quo of 100% dedicated to roads and bridges. While increasing the price of gas would probably reduce VMT and increase vehicle efficiency, those benefits could be wiped out (and more) by the effect of induced demand and increased VMT that come along with more roads and more highway capacity. Not only that, it reinforces a status quo of automobile exclusivity and bike/ped/transit hostility in nearly all of MN except for a few neighborhoods. Can anyone that cares about climate change, financial resiliency of our infrastructure “investments,” walkable communities, etc support such a gas tax increase proposal under these circumstances? Does this proposal need to be actively opposed by urban progressives?

    I do like the idea of local units of government being given the freedom to impose their own gas tax. Would that be exempted from the constitutional requirement that gas tax receipts fund roads and bridges?

    Maybe this entire conversation is missing the point, and instead we need to be moving to a future where we have congestion pricing for all urban freeways, with the money split between 1. repairing the harms and divides caused by urban freeways, 2. improving alternatives to automobile/freeway use, and 3. reconstruction and maintenance costs.

    1. Nick M

      I think this can work if the gas tax increase (either local or statewide) is coupled with a requirement that property taxes comprise a smaller (or zero) share of maintenance projects. That could free up room in local levies to pursue transit and non-motorized projects and shift the cost of cars to drivers. The plus side would be that it’s a more equitable policy that should be favorable to low income advocates and seniors, two populations that tend to be both cash-constrained and lower VMT.

      1. Matt SteeleMatt Steele

        That’s a great idea that could help drive bipartisan support, too. Expose how much of our road network is paid by property taxes, then increase user fees (gas tax) with a commensurate decrease in cross-subsidy from the general fund and elsewhere (property tax receipts).

        It would even be a win if there was a significant gas tax increase where 50% of new revenues went to road projects (because realistically they’ll do it anyways with their DEED slush funds and on and on) and 50% to other tax relief via reduction of cross-subsidy of road users.

  4. Scott

    Excellent article. There have got to be some other ways to fund the region’s transit system..

    How about Minneapolis (and other cities) put some resources into transit service? This could include reducing/ eliminating fares for City residents, paying for shelters/ benches/ signage/ snow removal at bus stops, upgrades to traffic signals allowing for transit priority, capital costs to jump-start ABRT, increased frequencies, etc.

    Some funding sources:
    1. Reallocate the downtown “entertainment” tax to fund transit rather than just the Convention Center and stadiums.
    2. Tax surface parking lots- especially in downtown.
    3. Raise parking fees in municipal ramps and allocate that funding for transit.
    4. Reallocate revenue from parking meters to support transit or transit supportive improvements along commercial corridors where the revenue is generated.

    City leaders are so focused on affordable housing that they cannot see the fact that transportation is typically the 2nd highest expense for people. Foster a highly functional and affordable transit system and it could save people thousands of dollars a year not having to pay to own, maintain, and park personal vehicles. People could be given a raise by eliminating that burden while freeing up money to spend on housing or other needs.

    1. Brian

      Dramatically increasing the costs of driving downtown will just push businesses out to the suburbs as leases expire. Employees are going to push employers to move where parking is cheap/free for the employee. The 40% who drive downtown right now aren’t all just going to switch to transit.

      My employer moved a group of employees downtown and at least one quit because they didn’t want to be downtown. Some of my co-workers would rather walk to work than ever take a bus so they drive. They seem to think that buses are full of undesirables that they wouldn’t want to associate with. They don’t understand that express buses from places like Maple Grove are full of clean well dressed professionals.

      I take the bus to downtown every day and it doesn’t bother me too much. My main complaint is the seats are too narrow as Americans gain weight.

    1. Nick M

      This sounds like a great talking point, but in terms of economics it wouldn’t work. Experience with privatized and open competition in transportation has proven that out. The people who need the service the most are the people who live in places without direct access to the destinations they need, i.e. jobs, shopping, and services are not near housing. If competition is introduced, those areas would be the first services dropped because they do not have enough traffic relative to the cost to serve. We would end up with multiple services running half-full buses on high-traffic corridors, clogging up roads and fighting for stop space and riders while areas with limited traffic but concentrated poverty would either have no service or the buses would drive by without stopping because of the desire to provide higher quality trips to people going from one major destination to another. What might this look like? Buses through North Minneapolis might stop at Plymouth, Broadway, and 44th on the way through but would force people in the interior neighborhoods to walk farther, wait longer, or pay more.

      Sometimes a regulated monopoly (or in this case, planned and exclusive provision of a public good by a public agency) is an economically and socially superior choice.

  5. adam w

    All Government Agencies need to quit subsidizing parking.Employers would rather subsidized parking than use the money for Health Insurance for their employees.

    Look at the state Capitol 1/2 of the green space is now parking .Which city/state would pave green space for parking infront of their capitol ?.

    Mpls and St Paul need to do quit promoting driving and make transit efficient and attractive to use.The LIGHT RAIL should not be stopping at traffic lights .The Green line is slower than #50 bus it replaced.We were promise 35mins travel time not 50mins on the Greenline.The 94 express was 20mins faster than the GreenLine.

  6. Pine SalicaPine Salica

    Wow, I’m in love with the idea of a metro area gas tax to fund transit. Like, I want to take it to dinner and just gaze into its eyes. $5 tax/gallon? 😍 call it a sin tax just like we do with alcohol and cigarettes.
    Sales tax is regressive, and would be more burdensome on the transit riders more in need.

    1. commissar

      $5 per gallon would likely end up in armed revolt. pretty much everything comes in to stores by way of motor vehicle. cargo bikes are simply not practical for large volume deliveries. you want to see the metro become a ghost town? that’s how you do it.

      10c is probably the most that you’ll get, 15 if the planets are aligned. but it’s fairly reasonable too.

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