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Big Transit Investments Included in Long-Sought Minnesota Budget Deal

Minnesota’s Democratic-Farmer-Labor Party won full control of the state Legislature and governor’s office, and is using the opportunity to make big investments in transportation.

Metro Transit's light rail. The state's public transit systems are expecting a big boost as a result of the funding overhaul by the Legislature.
In Brief:
  • A new transportation bill in Minnesota was signed as part of a $72 billion budget deal.

  • The bill ties the state gas tax to inflation in an effort to keep up with rising construction costs.

  • It also creates new, recurring funding that advocates say could transform the Metro Transit system.

  • Minnesota state lawmakers say they’ve created a “national model” for transportation funding with a new bill that creates more stable financing for roads and bridges, provides new recurring funding for public transit, allocates $200 million for a new passenger rail line connecting the Twin Cities to Duluth, and forces state agencies to make good on aspirational climate goals.

    All it took was more than a decade of false starts and half-measures followed by full partisan control of the state House, Senate and governor’s office.

    The deal, which was adopted as part of a $72 billion budget signed by Gov. Tim Walz last week, is the biggest transportation bill Minnesota has passed since 2008. Spearheaded by state Rep. Frank Hornstein and state Sen. Scott Dibble, who chair the House and Senate transportation committees, the bill rolls together years’ worth of efforts by lawmakers and transit advocates to improve the way transportation projects and public transit operations are funded. And it reflects a sense of urgency, on the part of Democratic-Farmer-Labor Party lawmakers, to take advantage of their rare control of the state budget to make long-needed investments in transportation.

    “The last time we had a trifecta, we largely failed — actually, we entirely failed to put through a meaningful transportation package,” says Dibble. “The first thing we knew after we won was that we have to finish this work. It’s too important to the success of our state.”

    The final deal, and the years of advocacy that preceded it, could hold lessons for states from California to Illinois and Pennsylvania as they navigate through steep increases in construction costs and dire budget crises in public transit.

    “I think we have created a national model for how to do transportation legislation at the state level,” Hornstein says.

    Funding Road Maintenance With New Fees and Taxes

    Among the most significant measures in the bill is a provision that ties the state gas tax to inflation. Minnesota’s gas tax is currently 25 cents per gallon, with a 3.5-cent surcharge. Under the terms of the bill, the tax will now be updated each year to match cost increases as determined by the Minnesota Highway Construction Cost Index. That will help prevent transportation funding from continually falling behind costs, as it has been for years.
    Part of the state's transportation funding allocates $200 million for a new passenger rail line connecting the Twin Cities to Duluth. (Minnesoata Department of Transportation)

    “That’s critically important because this is the workhorse of the system when it comes to funding roads and bridges,” Hornstein says.

    Every U.S. state has a gas tax of some type, and close to half of them are tied to inflation. The federal gas tax of 18.4 cents per gallon hasn’t been raised in 30 years, and inflation has substantially diminished its impact during that time. Lawmakers occasionally push to tie the tax to inflation, which would allow it to keep up with cost increases, but haven’t been successful at the federal level.

    While Minnesota has a budget surplus overall, all of its sources of transportation funding have been in steady decline over the last decade or so, according to Dibble. When it came time to negotiate the transportation bill, Dibble says that he and other leaders “had the paradoxical blessing in disguise of a really harsh and really weird winter.”

    “We had a lot of freeze-thaw cycles and that manifested in the poor condition of roadways all across the state,” Dibble says. “We were able to really drive the point home.”

    Big Boost for Public Transit

    It was also easier to argue for a change in the gas tax because some lawmakers, including Gov. Walz, had already been pushing for it in previous legislative sessions. The same is true for some of the measures affecting public transit. Included in the new transportation bill is funding for a Transit Rider Investment Program (TRIP), which would allow Metro Transit in the Twin Cities to hire ambassador-style personnel to help improve the transit experience. The TRIP personnel will help check fares, enforce codes of conduct and help connect people experiencing homelessness and addiction with social services agencies. The bill also decriminalizes fare evasion, making the punishment akin to a parking ticket and removing police officers from the equation.

    Both measures have been advocated for years by groups like Move Minnesota, says Sam Rockwell, the group’s executive director.

    “The reason this session was so successful was that we had all been pushing for the best possible outcome even when it was clear the politics wouldn’t allow it,” Rockwell says. “What that meant was that we had articulated a vision that could very quickly get drafted into legislative language.”

    Like other cities, Minneapolis has been experiencing elevated levels of crime and antisocial behavior on transit over the last few years, Rockwell says. But the increase is also outpaced by the perception, he says, with many people feeling newly unsafe on trains and buses.
    While Minnesota has a budget surplus overall, all of its sources of transportation funding have been in steady decline over the last decade or so, according to State Sen. Scott Dibble. (Minnesota Legislature)
    “[The TRIP program] is really taking seriously the concerns that folks have had about transit in the last couple of years,” Rockwell says. Lawmakers and advocates are hopeful that a concentrated phase of intervention on trains and buses to make people feel safer will combine with longer-term investments in service to improve transit ridership and the transit experience. “All we need is a bridge program,” Rockwell says. “If we make transit excellent, people are going to want to ride it again, and with more people riding it, people are going to feel safer.”

    The bill also makes huge investments in transit operations, with a 0.75 percent sales tax in the Twin Cities area to help fund transit and active transportation projects, like bike paths. The tax is expected to generate more than $450 million a year for Metro Transit. That’s a massive increase, Rockwell says — wiping out the agency’s operating deficit and giving it roughly an additional $300 million a year. That will help Metro Transit pursue plans like big expansions to its bus rapid transit network.

    The transportation bill also establishes a new interjurisdictional working group to help speed up bus operations, and several key leadership positions are open at Metro and the Metropolitan Council, which runs the agency. Rockwell says those things in combination give the system a chance to make big strides in terms of service levels, infrastructure improvements and ridership.

    “The agency has been underfunded for so long that the ability to think big has just been squashed. They haven’t had the resources to be able to deliver on a big vision, so in a way, why waste the time creating it? We now have a completely different paradigm, and we need to make sure that the transit agency feels empowered to go big,” Rockwell says.
    Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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