Fight erupts over new sales taxes for transit

03/27/2008

At issue: whether the money should be used to bail out Met Council


By Dave Orrick
Pioneer Press
03/26/2008


What did you think would happen?

On Tuesday, the day some cheered passage of new taxes for transit projects, partisan sparring broke out over how the new money — perhaps $100 million a year — would be spent in a dumpy economy.

It's not about one train project versus another but whether a sales tax hike and motor vehicle tax enacted by some Twin Cities counties should be used to patch a possible hole in the Metropolitan Council's transit budget.

The squabble, echoing from the Anoka County Government Center to the Capitol, could mean the difference between fare increases and service cuts on Metro Transit buses and whether the planned Central Corridor light rail linking St. Paul and Minneapolis is delayed.

On Tuesday morning, commissioners in Anoka and Ramsey counties adopted a 0.25 percent sales tax increase and a $20 per-vehicle excise sales tax, creating the state's first dedicated funding source for new train, bus or bike routes. Hennepin and Dakota counties are expected to follow suit, and Washington County is on the fence. Carver County said no, and Scott County is expected to opt out as well.

Only counties that support the new taxes will pay them and have a say in where the money goes.

Moments after their vote, Ramsey County officials began distributing position papers underscoring that they believe the new money must "supplement and not supplant" the normal funding of the Met Council, which operates the region's poised-to-grow transit system.

It was a response to Republican Gov. Tim Pawlenty, whose proposed budget seeks to address a $930 million projected shortfall by cutting the Met Council's budget. That budget is already shrinking because its dedicated funding stream — motor vehicle sales taxes — is sagging with the economy.

Met Council Chairman Peter Bell, a Pawlenty appointee, has been telling lawmakers he suspects a resulting $47.5 million budget hole could force fare increases or — worse — service cuts, if cash from the new taxes isn't injected into the Met Council's coffers.

Service cuts could spell trouble for the $909.1 million Central Corridor because the federal government, poised to pick up half the cost, is likely to frown on the project forcing cuts elsewhere in the system.

The state law that allowed the new transit taxes guarantees the Met Council $30.8 million, but Democratic-Farmer-Laborers, who on Tuesday rolled out some of their proposed spending plans, said any additional money was never intended to fill a hole.

"Of course, we're not going to go along with the governor's proposal," Senate transit division Chair Scott Dibble, DFL-Minneapolis, said.

He said the Legislature intended the revenue generated by the transit taxes (after the first $30 million for the Met Council) to enhance and expand the bus and rail transit system. "Those dollars are not intended to finance our existing, regular-route bus service," he said.

And so begin the negotiations between Republicans and Democrats over the state's budget.

Pawlenty spokesman Brian McClung said, "We think that piling tax increase after tax increase on Minnesota families already dealing with a difficult economy is a bad plan."

The $100 million or so projected to be raised from the new taxes will be pooled and doled out by counties that adopt the taxes.

Ramsey and Hennepin counties will have a majority of the weighted vote on the new entity that will spend the money. That arrangement — along with the idea of the Met Council being bailed out — prompted the following statement from Anoka County Commissioner Rhonda Sivarajah, who voted no:

"Don't think that Minneapolis and St. Paul legislators who are in control of both the House and Senate down at the Capitol won't be back next year to skim more money right off the top to ensure that their regular metro transit buses keep running in the inner city on the backs of the taxpayers in the suburbs," she said.

Reporters Bill Salisbury, Nancy Yang and Brady Gervais contributed to this report.

In Ramsey County

The vote: 6-1

Expected revenue: about $19 million in 2009

Voting in favor:

-- Chairwoman Jan Parker: "I see this as a giant step forward for a multimodal transportation system."

-- Commissioner Jim McDonough: "I recognize the responsibility and the accountability that goes along with that to ensuring that there is increased transit options in our community, ensuring that the dollars we're asking our citizens to pay have a measurable impact."

-- Commissioner Victoria Reinhardt: "Roads are not free. There is a public subsidy, and to have (transit) falling on property taxpayers within certain borders, and because they are not the only ones using it ... doesn't make a whole lot of sense."

-- Commissioner Toni Carter: "During tough economic times, it's very difficult to make these kinds of decisions, and finding the best way of funding this transit enhancement is our goal."

-- Vice Chairwoman Janice Rettman: "It stops us, it absolutely stops us from using property taxes to pay ongoing operations and maintenance, and I think that's critical. It's still coming out of people's pockets, don't get me wrong. (But) it's still a far better pocket to be coming out of."

-- Commissioner Rafael Ortega: "The sales tax is a much more progressive tax, and we need a transit system because the future for our kids, in terms of the mobility for their work and educational activities and recreational activities, is going to depend much more on public transportation than the automobile."

Voting against:

-- Commissioner Tony Bennett: "Been a tough decision for me. I changed my mind about four times on the way in this morning. I am a supporter that we need roads and transit. I do think there's a group of people out there who feel very strongly that this is a tax increase. ... It's a protest vote for those people who think this is going to raise their taxes."

In Anoka County

The vote: 5-2

Expected revenue: $8 million in 2009

Voting in favor:

-- Chairman Dennis Berg: "The big thing about the sales tax is, right now, property tax really does the heavy lifting on transit. This gives us a chance to shift that burden .... It's still a tax. But I think it's more fair."

-- Vice Chairman Jim Kordiak: "The sales tax is a better place to fund ongoing activity like this. Everybody shares in that cost whether they live here or visit here. Besides that, I see it is an opportunity to move some of our stations along."

-- Commissioner Dick Lang: "You can only fill up roads so much with cars. And consequently, you have to have some kind of rapid transit. It's the wave of the future, and we have to understand that."

-- Commissioner Scott LeDoux: "Unless we want to stick it to the property owners only, we need the sales tax."

-- Commissioner Dan Erhart: "Anoka County is clearly a leader in providing commuter rail for its residents and an immediate beneficiary from this financial mechanism. If we don't vote for this proposal ... Anoka County residents will virtually be guaranteed an increase in our property taxes, and we will unlikely ever see transitways on the eastern portion of Anoka County."

Voting against:

-- Commissioner Robyn West: "I also just felt that we cannot keep slapping a new tax on something every time the Legislature — either state or federal — wants money."

-- Commissioner Rhonda Sivarajah: "I've been contacted by senior citizens who are living on fixed incomes who are already choosing between basic needs like food and heat. This may seem like a small dollar amount to each of us, but for a lot of people who are on fixed incomes, it adds up."

— Brady Gervais and Dave Orrick