Commentary; Posted: 5/2/07
Property taxes feel pinch of gas tax debate
By Don Heinzman
Local units of government have dangerous state highway intersections to fix, but the Minnesota Department of Transportation doesn’t have the dollars to leverage federal funds to get the jobs done.
While city and county officials struggle to scrape up funds to correct “killer” intersections, state legislators wrangle over how to get more funds in politically-charged debates. The case comes down to either increasing a combination of taxes, notably the gas tax, or borrowing money by selling bonds, as proposed by Gov. Tim Pawlenty.
Case in point is Anoka County where an intersection with the most fatalities is at TH-242 and TH-65. Cost of rebuilding that intersection is close to $50 million.
Of that amount the city of Blaine will pay $2.1 million, turnback funds will be $12,500, Anoka County, $8.5 million, federal government $9.1 million with MnDOT paying $755,000. If all that funding comes, construction will begin this year.
Anoka County Board Chair Dennis Berg hopes MnDOT will have its share. He’s not holding his breath.
He contends MnDOT is broke and is living off borrowed money. He points to the funding for the reconstruction of the Hanson Bridge over US-10 which is costing $23,642,000. To do this project and levy the $6.094 million in federal money, Anoka county is borrowing $6.5 million to MnDOT at no interest to 2011.
The city of Coon Rapids must pay $3 million up front, the Anoka County, $7,447,000 and Hooley Development, $601,000.
The construction engineering and inspection cost of $1.2 million, which was to have been paid by MnDOT is being paid by Anoka County because MnDOT doesn’t have the funds.
Because MnDOT doesn’t have the funds to do the basic projects it has to delay one project to finance another. For example, MnDOT will take $35 million from a project to improve the three way junction of TH-169, County Road 81 and 85th Avenue in Brooklyn Park (Devils Triangle.) These funds will be used to keep the funding going for the Crosstown project of merging TH-62 with I-35W.
Governor Pawlenty, who threatens to veto a gas tax increase, prefers to sell more bonds and pay the interest. His belief is that state residents of the future will use the roads and should help pay for improvements then.
Pawlenty’s funding package for transportation included $400 million in bonds requiring $200 million to be paid in interest as part of the 2003 transportation package.
This session Pawlenty is proposing $1.7 billion in bonding that will cost interest of $850 million. The bonds are issued over the life of the program and are paid back over a 20-year period after the bonds are issued.
The Anoka County highway scenario is repeated in counties throughout the Twin Cities Metropolitan area. Some cities are using their property tax dollars to aid counties to provide road improvement funds; counties are using their property tax dollars to leverage state and federal funds.
There’s a good chance millions of federal funds will be lost to highway and transit improvements because MnDOT doesn’t have the matching funds.
The current state gas tax of 20 cents per gallon was passed by legislature in 1988 and today is worth 12 cents per gallon in purchasing power.
The Minnesota Transportation Alliance reports that maintaining funding levels until the end of fiscal year 2007 could lead to some projects being postponed.
Meanwhile, an impatient driving public continues to list traffic congestion as one of its biggest concerns.
If this legislature fails to provide adequate funding to maintain existing roads, highways and bridges, look for voters to ride some of them out of office in the next election.
Forest Lake Times
P.O. Box 218
880 SW 15 St.
Forest Lake, MN 55025
651-464-4601
Fax 651-464-4605