Billions in Spending Backed by Hundreds of Millions in New Taxes, Fees
Editor’s note: This article first appeared in the Minnesota Reformer and is reprinted with permission.
The DFL trifecta passed one of the most impactful transportation bills in recent memory, with close to $9 billion in investment on roads, bridges and transit infrastructure.
The law (HF2887) includes revenue generated from tab fee increases, a hike in the sales tax on vehicles, an increase in the gas tax and a new delivery fee. This means more money for roads and bridges, credits for electric vehicles, and seeds planted for a safe and robust metro and intercity transit network.
On a bus ride to the Capitol in February, Shakopee DFL Rep. Brad Tabke, vice chair of the House transportation committee, explained the DFL Legislature’s assertiveness: “One big thing that we’re doing this session is making sure that we’re leading with our values and our goals.”
Here are the top eight things you should know about transportation this session:
New Taxes, Fees Will Pay for Roads and Transit
Three major revenue sources are expected to generate $1.14 billion for transportation over the next two years.
The transportation bill creates a retail delivery fee to defray the cost of wear and tear on roads. It’s 50 cents per taxable transaction for products that cost over $100. Food, medicine and some other non-taxable items are exempted. The fee is expected to generate $59 million starting in July 2024. Small businesses that make less than $1 million in sales in the previous year don’t need to collect this fee.
The gas tax, which has effectively gone down in recent years because it’s stayed the same while inflation increased, will now be indexed to inflation. This is expected to generate $154.9 million over the next biennium.
The Twin Cities will also be getting its own transportation sales tax. The three-quarters of a cent sales tax — that’s 75 cents for a $100 purchase — will generate close to $923 million over the next two years. It will be divvied up: 79% will go to the Metropolitan Council to run transit; 4% to the Met Council for biking and walking; and 17% to local counties based on their population and transportation needs.
The sales tax on motor vehicles will also increase to 6.875% and be reworked to allocate 60% of proceeds to highways, 34.3% to metro-area transit, and 5.7% to greater Minnesota transit. This is expected to generate an additional $104 million over the next biennium, with greater Minnesota transit agencies getting close to an additional $40 million annually.
Met Council Under Scrutiny
Legislators from all parties are upset at the Met Council’s mismanagement of the $2.8 billion Southwest Light Rail project extending the Green Line southwest from Minneapolis to Eden Prairie. A March report by the Office of Legislative Auditor found the Met Council spent money on the project they did not have, and were not transparent about how they spent it.
The bill creates a panel to study how the agency should be reformed. Until their work is done, the Met Council cannot spend any sales tax proceeds on Southwest Light Rail. They also won’t be able to spend any more federal CARES Act money on the project. They will also have to report how they spend on the project once a quarter to the Legislative Commission on Metropolitan Government. The Met Council needs another $272 million to finish the project, which is expected to be completed in 2027, four years beyond the forecast it made in 2018, when they awarded the civil construction contract.
Most of the Transpo Money Is for Cars
About $7 billion of the spending package will go toward building and maintaining our roads and bridges. Here’s a rough breakdown:
- $2.3 billion to build and rebuild trunk highways, which are interstates and state highways.
- $76 million to widen freeways, including $50 million to the Corridors of Commerce fund.
- $53.25 million to address roadway safety concerns, which mostly includes converting intersections to interchanges.
- $22 million for local bridges, including to rebuild the Kellogg/Third Street Bridge in St. Paul.
- $500,000 to nonprofit carshare providers such as HOURCAR to expand their programs. Such programs will also no longer have to collect car rental tax.
The bill does not include funding or a provision to study converting I-94 between Minneapolis and St. Paul to a boulevard. Legislators say they need to know more about the Minnesota Department of Transportation‘s existing plans to rebuild the freeway before they decide. Still, the overall vibe of DFL legislators is that they don’t want to continue investing in freeways. As such, they’re requiring MnDOT to study if freeway widening projects can reduce the state’s greenhouse gas emissions and vehicle miles traveled before they can rebuild it. The agency will also have to establish greenhouse gas reduction targets by February of 2025. (Transportation is the biggest emitter of greenhouse gas emissions in Minnesota.) Republicans opposed the provision and support projects like the widening of Highway 14 to two lanes in each direction to accommodate increasing truck traffic.
The Department of Public Safety will get $5.6 million to address safety on Minnesota roads, the bulk of which will go toward enforcement. This comes as Minnesota roads are as dangerous as ever; 446 people died on Minnesota roads in 2022, the third-highest amount since 2007. They will also report on how violators have handled past citations by July 2025 and determine how best to implement speed cameras by January of next year.
But Those Who Can’t or Don’t Drive Will Also Get a Slice of the Pie
The Metropolitan Council will get $230.3 million to build out and operate the Twin Cities’ transit system over the next two years. About three-quarters will go to Metro Mobility, which serves seniors and people with disabilities. Another $50 million will go toward planning the Bottineau Light Rail Extension northwest from Minneapolis to Brooklyn Park. An additional $79 million from the public works bills will go toward building out the region’s rapid bus system, in addition to the $3 million earmarked in the transportation bill.
Starting in July and for the next 18 months, the Met Council must use sales tax proceeds to allow everyone authorized to ride Metro Mobility to ride any regular route transit for free. They will also make two routes fare-free for the general public for the same period. They will report to the Legislature on its implementation and its impacts on ridership and rider experience in February 2025.
The Legislature decriminalized fare evasion among all Twin Cities transit agencies starting July 1, allowing the Met Council to bring on “transit ambassadors” and civilian workers to issue citations similar to how parking tickets are issued. (Disclosure: I spoke in favor of a similar bill in February 2020 before becoming a professional journalist.) These personnel will also work with mental health professionals and social workers to keep the system safe in light of increasing crime and degraded quality of life, especially on light rail trains, which have been beset with indoor smoking and harassment.
The Met Council must bankroll its own study on how transportation patterns have changed since the pandemic, due next October.
Transit agencies in Rochester and the Twin Cities suburbs will also receive just over $9 million to create or expand their microtransit services, which operate similarly to Uber and Lyft, but in a defined area.
And Yes, Better Transit Applies to Those Visiting, Living or Working in Greater Minnesota
The bill allocates $205 million in the next two years to expand the state’s intercity rail program. Of this amount:
- $194.3 million will restart passenger rail service between Minneapolis and Duluth, which was discontinued in 1986.
- $5 million will match federal funds to pay for a second passenger train to begin operating between St. Paul and Chicago this summer.
- $4 million will go toward conducting a study on transit service between St. Cloud and the Twin Cities, as well as evaluating the feasibility of extending the second train between St. Paul and Chicago as far north as Fargo.
The bill also allows local communities to explore building two commuter rail lines connecting Northfield and Rochester with the Twin Cities for the first time since the Legislature forbade it in 2002 and 2016, respectively.
More People Will Have Access to Drivers’ Licenses
Starting in August, 15-year-olds who have to care for a disabled relative will be able to get a license, and those whose licenses were suspended for failing to appear in court or drove without a valid license can have it reinstated for a $20 fee. Those who are moving to Minnesota from another state and already have a license won’t have to take a written test if the test is similar to the test back home.
Then in October, people regardless of immigration status will be able to obtain a drivers’ license. License fees will also increase by $6. Finally, next April, people leaving incarceration can get free 15-month licenses.
Want an Electric Vehicle? You’ll Get a Rebate
In the natural resources budget bill, one person per household or business wishing to buy an electric vehicle can get a rebate of up to $2,500. The base value of the car cannot exceed $55,000. The Department of Commerce will get $17.7 million over the next two years to implement the program, with auto dealers getting $2 million of that amount to administer the rebates.
Those opting for electric bikes will also get a credit of up to $1,500, depending on their income and how much the bike costs. The Department of Revenue will receive $4 million to run the program. E-bikes have burgeoned in popularity, with bike shops in Alexandria, Minneapolis, Rochester and Duluth reporting increases in e-bike sales year-over-year, generally by families and older people who need some help getting back on a bike. E-bike incentive programs elsewhere have proven so popular that those programs often prematurely run out of money.
Someday, It’ll Be Easier to Walk and Bike in the State
MnDOT’s Office of Transit and Active Transportation will receive $76.4 million, a portion of which will be used to plan out the state’s bicycle and pedestrian infrastructure. Of this amount, $40 million will be used to match federal Bipartisan Infrastructure Law funds.
An additional $28 million allocated in both the transportation and infrastructure bills over the next two years will be allocated toward making it easier to bike and walk to school. The Legislature also allocated $13 million to enhance bicycle and pedestrian pathways, which includes building out ADA-compliant infrastructure in Minneapolis, St. Paul and Rochester.
On the policy side, people riding bikes can now treat stop signs like yield signs — known as the “Idaho stop” — as well as take the right-turn lane to cross an intersection. The December death of Minneapolis transportation advocate and legislative watchdog Bill Dooley seems to have catalyzed the changes, which bike advocates have lobbied on for years.
This article first appeared in the Minnesota Reformer and is republished with permission. Minnesota Reformer is a part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Minnesota Reformer maintains editorial independence. Contact Editor-in-Chief Patrick Coolican for questions. Follow Minnesota Reformer on Facebook and Twitter. H. Jiahong Pan took the photo at the top of this story on April 19, 2023—Minneapolis, Minnesota, USA.