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MVST amendment gets 57 percent voter approval

Latest forecast dampens plans to expand transit

First, the good news: In November 2006, 57 percent of voters statewide said “yes” to a state Constitutional amendment to dedicate 100 percent of the motor vehicle sales tax (MVST) to highways and transit, phased in over five years.

Now, the bad news: Just a few weeks after the vote, a new state forecast of total MVST revenues showed a marked decline from the February 2006 forecast. The expected result is $36 million less in total MVST revenues in the current state fiscal year, which ends June 30. And that means a reduction of $8.1 million for regional transit providers, including Metro Transit.

The outlook in the next biennium is worse. The forecast predicts total MVST revenues will be down $52 million in FY2008 and $57 million in FY2009 from the previous forecast. That will leave the regional transit providers with $31.1 million less in MVST revenues for the biennium than predicted, even as the phased dedication begins to take effect on July 1, 2007.

“We’ve had fabulous ridership growth in the last two years,” said Arlene McCarthy, the Metropolitan Council’s director of metropolitan transportation services. “People are demanding more transit options, not fewer. We hope to get funding from the state’s general fund to both maintain and grow the system.”

“Continuing to increase transit ridership and meet the growing demand for more transit options is critical if this region hopes to slow the growth of traffic congestion,” said Peter Bell, Council chair. “The region is on pace to add nearly one million people between 2000 and 2030, and that growth is bringing more traffic to our roads and highways.”

Legislature must decide fund allocation

The next step is for the 2007 Minnesota Legislature to pass legislation establishing the share of MVST revenue that goes to public transit and to highways. The approved amendment requires the Legislature to allocate at least 40 percent of the revenues for transit, and not more than 60 percent for highways. Since regional transit funding shifted from the property tax to MVST in 2002, transit providers in the seven-county area have received about 21.5 percent of MVST revenue for transit.

The Council’s plans for the regional transit system assume a 40/60 transit/highways split, with the bulk of the transit dollars staying in the metro area. The Council’s top priority is to maintain the existing bus and rail system. The Council hopes to grow the system by adding new local and express routes and facilities, such as park-and-ride lots.

The Council also hopes to use MVST revenue to make a significant contribution towards the capital costs for the Central Corridor light rail transit line, and to operate Central and other Tier I transitways identified in the Council’s 2030 Transportation Policy Plan. These include Northstar commuter rail, and bus rapid transit in the Cedar Avenue, Bottineau Boulevard and I-35W corridors.

Varied funding sources are needed

Even before the new forecasts were made, Bell said that to maintain and improve the regional transit system, the Council would need to pursue continued general fund dollars, state bonding for capital projects and federal funding. With declines in MVST revenues, that need is even greater.

“Passage of the amendment is a relief and it provides opportunities,” said Bell. “But it’s clearly a volatile funding source and this is no time to rest on our laurels. Now we get back to the work of securing other needed funding to continue to address the region’s mobility issues.”