Decline in vehicle sales tax collections may mean leaner times for transitby Dan Olson, Minnesota Public Radio
Sales tax revenue collected on the sale of vehicles in Minnesota is down. The reason is a downturn in the number of vehicles being purchased. The slump in the motor vehicle sales tax revenue means less money for the Twin Cities public transit system. Metro Transit relies in part on MVST money to fund its bus and rail service. The solution, in the view of one state lawmaker, is make up the shortfall from the state's general fund. But Metropolitan Council officials say they need to consider fare increases and service reductions as other options.
St. Paul, Minn. — Only weeks after announcing Twin Cities bus and rail ridership has rebounded to passenger levels not seen in a quarter century, revenues that are being counted on to improve service and attract even more riders are down. Metropolitan Council President Peter Bell laid out the bad news.
"They are projected to be down $8.1 million between now and the end of June 30th and $31 million for the next biennium," Bell said.
The Metropolitan Council owns and operates most of the Twin Cities public transit system. In five of the last seven years the agency has had to slice Metro Transit funding. The result is the agency has increased fares and cut service. Peter Bell says those are the options on the table now in light of the projected downturn in motor vehicle sales tax revenue.
"If we do not address it, it is likely to necessitate fare adjustments and route restructuring," he says.
Bell says raising the Metropolitan Council share of the Twin Cities wide property taxes could help fill the transit funding gap in the short term. But Bell says the Council is committed to keeping a lid on its portion of property taxes.
Sen. Scott Dibble, DFL-Minneapolis, who chairs the new transit subcommittee of the Senate transportation committee says, the state's general fund should be tapped to help fill the hole.
"We may need to look to a general fund contribution. The transit system now does rely on some portion of general fund revenues from the state, so look at increasing the general fund. But also keep in mind filling up these holes only maintains the current service level," he says.
Minnesota voters resoundingly approved amending the state constitution this past election to avoid the very problem facing the Metropolitan Council. Voters approved language which says 100 percent of the motor vehicle sales tax revenue will be used for transportation. Currently about half goes to the general fund.
The assumption of many lawmakers is when they convene in January they'll divvy up the hundreds of millions of MVST dollars collected with about sixty percent for roads and bridges and about forty percent for transit.
There are two problems.
The additional MVST money for transportation doesn't start flowing until 2008.
The other problem, state officials say, is motor vehicle sales tax revenues fluctuate rather widely from month to month depending on a range of factors including the strength of the economy and incentives offered by car makers.
Long term there's a much bigger problem.
MVST revenue, as Peter Bell says, is only a fraction of what is needed to meet the agency's goals of a huge increase in transit ridership over the next quarter of a century.
"We do have a goal increasing transit ridership by 50 percent by 2020 and doubling it by 2030 and if we are not able to address this revenue shortfall, it does put that goal into some significant jeopardy," he said.
A sharp upturn in wages, a big wave of auto maker sales incentives and other factors could increase motor vehicle sales tax revenues in the short term and reduce the size of the MVST shortfall. If that doesn't happen and if the projections hold true lawmakers face a more complex debate over what to do to address both the short term and long term financial outlook for the Twin Cities transit system.
- All Things Considered, 12/06/2006, 4:52 p.m.