New permanent revenue unlikely this year; bonding level uncertain
Few if any Minnesota legislators would deny that the state’s transportation infrastructure is out of date and in need of upgrade.
During the 2013 legislative session, DFL lawmakers and Gov. Mark Dayton settled on a $300 million funding package for so-called Corridors of Commerce. In October, when Dayton announced the awarding of grants for 10 projects spread throughout the state, his announcement was heralded as good news by a number of Republicans, including U.S. Rep. Michele Bachmann and Rep. Kurt Zellers, R-Maple Grove.
If nearly everyone at the Capitol is on board about the importance of transportation spending, there is still major disagreement about when and how to fund maintenance costs, not to mention new projects. The Corridors of Commerce funding authorized the sale of $300 million worth of trunk highway bonds for needed repairs. Key legislators and administration officials say the state is still in need of a permanent financing scheme, despite the failure to adopt a new funding system during the 2013 session.
Next week, Rep. Frank Hornstein, DFL-Minneapolis, and Sen. Scott Dibble, DFL-Minneapolis, plan to introduce a funding package that they will push during the upcoming session. The respective chairs of the House and Senate transportation finance committees face an uphill battle as they look to raise new revenue, mirroring an effort that lasted almost the whole of last session without success.
Dibble acknowledged that the case for new tax revenue could be even more complicated to make during an election year.
“I don’t disagree,” Dibble said, “that the task in front of us is largely a political one.”
Low bonding figure criticized
Department of Transportation Commissioner Charlie Zelle laid out the case for increased funding during a joint hearing of Hornstein’s and Dibble’s committees on Monday, pointing out that nearly half the state’s roads are more than 50 years old. Zelle positioned Minnesota’s effort to address funding shortfalls as part of a national trend. Eight states, including Minnesota, are weighing comprehensive funding proposals this year, while 11, including Wisconsin, approved them in 2013.
During Zelle’s testimony, Rep. Mike Benson, R-Rochester, said he was aware of “supreme disappointment” from county and city officials in his district over the lack of transportation funding in Dayton’s recently released bonding bill. Out of nearly $1 billion, Dayton designated only about $80 million toward transportation. Benson asked Zelle if his department had a “seat at the table” as Dayton crafted that proposal.
“I’m very fortunate to be at the table,” Zelle said, “and we made recommendations, not all of which were chosen.”
For his part, Sen. Jeff Hayden, DFL-Minneapolis, thinks bonding dollars are better spent on one-time “legacy” projects, such as the Southwest LRT rail project, which was not included in Dayton’s bonding plan. If regular highway projects rely too heavily on a capital investment bill, the process could devolve into a game of “high-stakes poker,” said Hayden, a member of the Senate Capital Investment Committee.
Dibble thinks the two approaches are not mutually exclusive, arguing that some portion of general obligation bonds are usually dedicated toward infrastructure projects. Dibble said he expects to have a “strong position” for such spending out of this year’s capital investment bill.
State Chamber opposes tax hike
In trying to build support for the idea of new revenue, the administration has been meeting with the Minnesota Chamber of Commerce, which so far has steadfastly opposed raising taxes, including the gas tax, in order to generate new revenue. Chamber lobbyist Bentley Graves, a policy specialist on transportation, pointed out that the business organization had been supportive of revenue increases in previous years, including the 2008 move to raise the gas tax by 8.5 cents per-gallon.
But Graves said the group had hoped for an increased focus on “efficiencies” to reduce transportation costs over the long term. Chamber of Commerce members are not satisfied that the Legislature has done enough to find and capitalize on those efficiencies, said Graves, and would be reluctant to commit to more spending without confidence in the state’s willingness to cut costs.
“Transportation is an important issue for [Chamber members], but there’s not an appetite for new revenue,” Graves said. “On top of that, they’re still dealing with a $2.3 billion tax increase from 2013.”
The Chamber’s stance may be a pivotal factor in the near-term direction of state transportation spending. Speaking at a Capitol Report session preview event last week, House Speaker Paul Thissen, DFL-Minneapolis, said he thought it was impractical to talk about transportation-related tax increases until the state’s largest business lobbying organization got on board.
In a similar vein, Rep. Tim Mahoney, DFL-St. Paul, said the onus is currently on supporters of higher spending to prove that the idea resonates with the public. Without clear evidence of backing among the general public, a bill to raise the gas tax or sales tax is unlikely to go anywhere, said Mahoney, a member of the House Transportation Finance Committee.
“I think the policymakers and the advocates are a bit ahead of the population as a whole,” he said.
The point is not lost on Dibble, who knows that his House DFL counterparts are running for re-election this year, as is Gov. Mark Dayton. In order to pass a tax hike of any kind, Dibble said, transportation advocates will need to make a clear case that the increased funding will lead directly to an improved economy and quality of living in Minnesota.
“I get the hesitancy of Speaker Thissen, and I get the hesitancy of Governor Dayton,” he said. “We need to have communicated clearly what this could mean for people. It needs to be done easily, and in a way that people can understand and support.”