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DFL Senate Offers Way Forward On Transportation NOW

Category: Transportation
Posted: 05/30/15 17:33

by Dave Mindeman

The DFL legislators on the Transportation Committee have put forward a letter to Governor Dayton, released to the House GOP, proposing a strong compromise bill for Transportation that would hopefully be considered for special session.

The basics.....

The DFLers dropped their plans for a sales tax on the price of gas. The leaders propose the more traditional per gallon gas tax, adding a dime to the current tax, cutting projected revenue from this source by one-third. The new DFL plan would replace this lost revenue by agreeing to a House Republican idea to dedicate the sales tax on auto parts to roads and bridges. The DFL plan would seek to ensure that this is made permanent with a change to the state constitution.

This incorporates the major components of both the House and Senate revenue plans while reducing the gas tax proposal and bringing in the House GOP proposal of dedicated sales tax revenue.

Since the incorporation of the GOP part of this would require taking money from the general fund and a probable hole in the next budget, the DFL Senate is offering a major concession to move transportation forward.

In addition, the proposal proposes a .25% Metro tax for transit. A transportation need that the House GOP proposal ignores and which puts several transit projects at risk.

Considering the impasse that is already developing on the basic budget issues, this transportation proposal will probably get tabled.

But let's be clear, the Democratic Senate has made the offer for an area that Greater MN wants action on. If the House GOP refuses to move again on this important Greater MN need, I hope that the outstate groups will be clear about that understanding.

If we are going to wait on transportation needs for another year and try to negotiate these difficult issues in an election year, the problem in movement is clearly emanating from the GOP.

Dems are offering an opportunity, they are willing to meet it halfway... where will the House GOP be on this?
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The MN House GOP Revolving Credit Card In Transportation

Category: Transportation
Posted: 04/13/15 23:28

by Dave Mindeman

The Minnesota House Republicans like to talk a lot about the average family budget. They like to make comparisons to family budgets and our own state budget. And all of this talk often involves some criticism of taxes. The average family budget cannot take an increase in taxes. They just can't.

But you know what gets most family budgets in the most trouble? Debt. Credit card debt. Mortgage debt. Payday loans. Borrowing from friends. Debt is something to be careful with...to manage properly. And, quite frankly, should only be tapped into when absolutely needed.

Republicans are always careful about raising taxes that will put a strain on those family budgets. But when it comes to debt, they are the equivalent of your friend who uses one credit card to pay off another credit card. Or taking out a loan and stretching it out over years because it will keep the monthly payment down - even though the total amount of money paid can double or triple in regards to the original loan.

That is what the MN GOP House is doing with transportation funding. They are avoiding what we should pay now by adding to debt that we must pay later. And while that may not involve a tax increase, we do pay more. We pay for that bonding. We pay interest....we pay brokerage fees....we pay other administrative costs. And since we lost our AAA bond rating in 2011 (down to AA+), we also pay a slightly higher interest rate than we did before.

But just like families who don't think about the long term effects of debt, the House Republicans are ignoring that aspect of the budget. The budget debt service - the percentage of the state budget that goes to paying down our debt and its interest - has nearly doubled since 2000 (1.8% to 3.4%). Granted, that is probably not an unmanageable number considering current interest rates. But why do it if it is not necessary? And especially - why increase it beyond regular bonding proposals?

When it comes to transportation, the state of Minnesota has traditionally relied on user fees to pay for the MNDOT budget. Yes, there are trunk highway bonds which are regularly used, but the borrowing is usually kept to a minimum. But what the House Republicans are proposing is a significant increase in bonding for this purpose. And, in addition, they are going to shuffle money in the regular MNDOT budget and push it to roads and bridges at the expense of already proposed projects - a lot of them mass transit related. Which puts more future projects in jeopardy.

But the worst flaw in this "plan" is that it does not increase or create consistent revenue streams for transportation. It is obvious that we need an infusion of increased money (both Democrats and Republicans agree on this point at least) into transportation. And the critical problem is that this money needs to be a constant going forward. Our transportation needs are growing (along with our economy) and the MNDOT budget is not going to level off any time soon.

Gov. Dayton and the MN Senate understand this and have budgeted accordingly. Only the MN House holds the state back in this regard.

So, in essence, this House GOP effort to save you an increase in taxes in the short term....is costing you (and the next generation) much more in the long term.

That is not sound fiscal stewardship. It is a revolving credit card of poor judgement.
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Transportation: GOP Says No Taxes-But We Still Pay Up Big Time

Category: Transportation
Posted: 04/05/15 21:05, Edited: 04/05/15 21:06

by Dave Mindeman

One item that the Minnesota legislative parties seem to agree on is that transportation has to have a high priority in this state. Democrats and Republicans agree on this.

But, as usual, they disagree on how to fund it.

The House Republicans put forward their plan and local Representative Anna Wills is very proud of how her party has handled this.....

Under the Republican plan, sales tax proceeds that are already being collected on auto parts, vehicle leases, and rental cars would be diverted to a new Transportation Stability Fund, which makes up the majority of the plan's 10-year funding. Our plan also uses a small portion of the state's $1.869 billion surplus, as well as bonding to ensure that our state's roads and bridges are improved and remain in good condition for years to come.

The House GOP does all of this without taxes - why, it is almost like it is free money! A whole lot of something for nothing. Why don't we do this all the time? It is magic!

But, of course, you know better than that. And what is worse, this does nothing to solve our ongoing needs.

Here are some of the key words....

1. "Diverted". In a nutshell, the House Republicans are forcing MNDOT to take money earmarked for other projects (like light rail and buses) and move that money into road repair. The figure being used is $3 billion. It must be noted that this is money coming from existing taxes. It seems logical to assume that MNDOT has already made plans for that money....otherwise why would they be coming to the legislature to ask for a new infusion? Projects already in the pipeline get halted. Projects get cancelled. Planned projects are delayed. Is this solving anything?

2. "Small Portion...of the surplus". The exact figure is $228 million of the $1.87 billion total. This is really the only "new" money being used in the transportation package and it is one time only money. This is not funding that can maintain a transportation package going into the future. So money that could go to a rainy day fund or shore up deficit projects in other departments is added to transportation. That's fine - but once it is used, it is gone.

3. "Bonding". Ms. Wills glosses over this part as far as funding goes. But it is the focal point of the package. No taxes, yes....but borrowing? Oh yeah - a whole lot that.

$1.3 billion in Trunk Highway bonds, $1.2 billion from "realigning" resources within the Minnesota Department of Transportation (MnDOT) and promises to do more than $1 billion in bonding for roads and bridges over the next decade.

Republicans always seem to treat bonding as a "free" avenue for funding any project or department. They used tobacco funding for education, for which we have just begun to pay a $1 billion service fee. We don't know how much debt service this proposal will cost Minnesota taxpayers because the details will have to be ironed out - but the House GOP assumes, I guess, that we shouldn't worry ourselves over those details. After all, we won't be paying taxes! Just interest!

And the additional idea that other bonding will be added to the mix means one thing. The traditional bonding packages that occur every other year and fund numerous local projects will have much less to work with, because the House wants to dedicate that money for their "higher priority".

So light rail gets delayed. We add to the debt service. We raid the surplus. And MNDOT still does not have an ongoing method of funding.

All of this, so that the House GOP can say - we did not tax you.

Spare us the semantics. We still have to pay - and pay big.
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