Transit tax board hoping to meet revenue projections
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The recession has already taken a bite out of Twin Cities transit funding. So, transit supporters are warily watching one of the newer sources of transit funding that relies on sales taxes to see if revenue collections this year match projections.
Shoppers in five Twin Cities counties - Anoka, Hennepin, Ramsey, Dakota and Washington - pay an extra quarter-penny sales tax (on top of the nearly 6.9 percent state sales tax already in place.) That extra quarter of a penny levy raised $87 million last year.
The projection for this year is $85 million depending on what consumers do. The money raised from the quarter-penny tax helps fund transit in the Twin Cities.
Hennepin County commissioner Peter McLaughlin chairs the five-county Counties Transit Improvement Board, the agency that collects and dispenses the transit sales tax revenue.
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McLaughlin said some of the money pays a portion of the operating costs of the Hiawatha light rail line and the Northstar commuter rail service to Big Lake. McLaughlin said most of the revenue goes for planning and building light rail.
Last year for example, $66 million was directed at Central Corridor light rail planning and construction. McLaughlin said lesser amounts are going to plan and operate BRT, bus rapid transit service on dedicated lanes.
"We're funding two different lines that reach into the southern suburbs out of Minneapolis, Cedar and 35W, park and ride investments in the east metropolitan area," McLaughlin said. "We are investing in the southwest corridor so that will be the next LRT line ready to go."
Board member Myra Peterson, a Washington County commissioner, said some smaller grants go for such things as funding a bus line from Forest Lake to St. Paul. She predicts money from the board will fund future bus rapid transit and commuter rail investments serving her county.
"We're looking at a transit station in Newport; we're looking at commuter rail for Red Rock," Peterson said. "We're looking at the 94 corridor and at the 36 corridor for the future."
Creation of the Counties Transit Improvement Board and the quarter penny sales tax almost didn't happen. Minnesota lawmakers had to override the governor's veto in 2008 of the state transportation bill that created the agency.
The Minnesota Chamber of Commerce played a key role in convincing lawmakers sitting on the fence to vote for the override. The Chamber doesn't often support new taxes.
They went along with the creation of the quarter-penny sales tax because of their view that Minnesota's transportation system needs more money. Chamber member Douglas Fulton, a commercial real estate executive, said that may still be the case.
But before raising more taxes, Fulton said, he recommends making sure existing revenues are spent wisely.
"Maybe we need to allocate additional general fund dollars toward transit, but we need to make sure it's a priority [and] that we don't raise taxes and make Minnesota such an expensive place that you can't afford to do business here," Fulton said.
There's no proposal on the table to raise the five-county sales tax funding transit. Nearly all of Minnesota's tax revenue streams have shrunk in the economic drought caused by the recession, and revenue for transit is no exception.
One prediction was the quarter of a penny would bring in about $100 million a year. The first full year was $87 million, and $85 million is predicted for this year.
It could be and it is a lot worse elsewhere.
Jacqueline Byers, director of research for the Washington, D.C.-based National Association of Counties, said counties in more than a dozen states use local option sales taxes for transportation and some of the revenue declines are eye popping.
"Right now, many of these dedicated sales taxes for transit are seeing shortfalls," Byers said. "The one I've seen articulated is in Seattle, King County, for their mass transit. At the beginning of this fiscal period they estimated a $100 million shortfall."
Supporters regard the creation of the Twin Cities' five-county transit sales tax as the long sought guaranteed source of local money that will attract federal money for expanding the region's transit system. But the prospect of more federal money is murky at the moment.
The proposed federal transportation bill includes tens of billions for transit, but the measure is stalled in Congress and may not gain momentum for months.
