The Free Press, Mankato, MN


November 25, 2013

Transportation Commissioner on road funding: Big return

As the former CEO of Jefferson Lines bus company and current chairman of the board, Minnesota Transportation Commissioner Charles Zelle sees the transportation department as a business that has investments to make that offer the state and businesses a 2.5 to 1 return.

Current funding streams leave Minnesota transportation needs $12 billion short over the next 20 years, an investment, Zelle says, if made would return $31 billion in direct benefits, not including indirect benefits like more economic development. The direct benefits count only less congestion, time waiting in traffic and other cost savings mostly to the private economy that can be made with a public investment.

"There's a business case to be made," Zelle said of increasing road funding.

So Zelle has recommended a number of revenue ideas for closing that gap, many of which were recommended to Gov. Mark Dayton last year as part of the report from the Transportation Finance Advisory Commission, where Zelle was a member. Indexing the gas tax, fees on licenses and sales taxes should all be considered as possible funding streams. Tolls and things like MnDOT's MnPass system should also be part of the mix.

Transportation funding is a matter of arithmetic, not politics, Zelle says.

He favors indexing the gas tax or setting up a sales tax on wholesale gasoline sales that would rise automatically as sales rise.

"I'm here to say you need something."

Dayton was unwilling to recommend a new gas tax last year and has been asking Zelle if he can come up with some other innovative financing method, a challenge that Zelle says he hasn't been able to come up with just yet. MnDOT has more of a comprehensive strategic plan now as well, something Dayton wanted to be developed before a push for new funding.

Of the $12 billion needed, $5 billion is simply to maintain the system itself with current goals for funding preservation of roads and maintenance of bridges. Zelle says the shutting down of southbound Interstate 35 near Duluth to repair and eroding bridge will have a huge economic impact on the area and highlights how important transportation investment remains to the state and its economy.

He suggests the state should act like some of the manufacturing companies he has seen on his tour of the state. They are "not shy" about making significant investments in their plants when its warranted by the return.

In the same way, Minnesota shouldn't be shy about investing in transportation. Zelle noted Dayton's recent unwillingness however to carry the tax increase plan without bipartisan support. Zelle says he's talked to Republicans and Democrats saying they can come together to support a transportaton plan, but he noted some Republicans say they like the transportation funding plans and seem to understand the need but "can't vote for it," suggesting a political reason from GOP party officials or elsewhere.

Zelle acknowledges that reality but says at some point legislators have to "look at what's good for their consituents."

From his 60 plus town hall meetings on transportation finance from around the state, Zelle says he gets the sense most residents and businesses see transportaton as one thing that is definitely the government's responsibility and either don't have a problem with the investments or would suggest spending be taken away from one area and put into transportation.

Reading between the lines, it seems like any proposal by Dayton or Democrats to propose increasing the gas tax or other fees in an election year would be a nonstarter if some Republicans don't also get on board.

On local issues, Zelle said Highway 14 didn't make MnDOT's 20 year plan in part because there is no available funding stream identified for the expansion. And, there tends to be confusion about the 20-year plan he said. When the federal government still had so called "earmarks," including of a project on a 20-year plan was somewhat more relevant even if funding had not been identified. There was always at least a chance federal funding might be directed to the project.

That's no longer the case.

He also pointed to the Corridors of Commerce program that recently allocated up to $45 million for completing parts of Highway 14. But the $300 million in trunk highway bonds that were allocated to the Corridor program and disbursed to various project have pushed up against the limit for MnDOT's indebtedness. It's bonded debt should be limited to 20 percent of its revenues, and the $300 million allocated to the corridors plan brought them close to that level.





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