Minnesota and the New Federal Transportation Bill

Minnesota and the New Federal Transportation Bill

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By Dave Van Hattum, Advocacy Director

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The new federal transportation bill, the FAST Act, includes some notable changes likely to affect Minnesota’s transportation network. After nearly a decade of short-term extensions to previous legislation, the recently passed bill provides important long-term funding that states need for planning and project implementation. Transit, bike, and pedestrian programs that were on the chopping block in House deliberations survived in the final legislation.

While the FAST Act (an acronym for Fixing America’s Surface Transportation Act) is significant, it doesn’t take the pressure off state and local leaders facing expensive transportation repair and maintenance costs and rising demand for multimodal options. Unfortunately, as played out at our own State Capitol last year, FAST fails to provide the increased funding our transportation system really needs. It fails to raise the federal gas tax—last increased in 1993—and instead draws heavily from general fund dollars, which could be used elsewhere. Although it’s clear that the FAST Act is only a partial solution, the highlights below suggest we’re moving in the right direction in several ways.

Positives

Transit-oriented development (TOD) gets some love. Tweaks in policies, increased access to low-interest financing programs, and a new pilot program to fund local TOD planning are important acknowledgements in the FAST Act of the link between transportation and land use. If Minnesota’s state legislature increases transit funding this year, planned projects like the Southwest and Bottineau light rail lines can not only move forward, but also will be eligible for these new federal dollars to help maximize the community- and economic benefits of our investment.

All users considered. The credo of Complete Streets has been added to the transportation bill, requiring state transportation departments to consider all users in transportation planning. Further, FAST enables local governments to use alternate planning guidebooks for federally funded projects. This means communities interested in designing streets with people and neighborhoods in mind don’t need to be restricted by design manuals that focus predominantly on moving cars as quickly as possible.

Passenger rail included. At $10 billion, FAST brings passenger rail funding into the larger surface transportation authorization for the first time ever. Passenger rail funding has typically passed as a standalone bill and Congress has been notoriously slow on this issue. MnDOT continues to study expanded passenger rail service in Minnesota, including the proposed Northern Lights Express between the Twin Cities and Duluth, and additional daily Amtrak trips between Saint Paul and Chicago.

Bonus: Congress approves commuter benefit parity in related federal action. A new amendment to the IRS tax code puts transit benefits on par with parking benefits, setting a $255/month cap for each. Workers save up to 40 percent when they are able to pay for commuting expenses using pre-tax dollars or when their employers provide commuter benefits tax free. Unfortunately, for most of the 30+ year history of this tax provision, parking was treated much more favorably than transit or bicycling. In recent years, monthly parking benefits were capped at $250/month, while transit had a cap of $130/month, and bicycling $20/month. This inequity was a powerful subsidy for driving and parking.

In Minnesota, nearly all transit fares, except on Northstar Commuter Rail, fell within the previous cap. However, it is an important change for millions of transit riders across the country. Next we’d like to see greater parity for bicycling and walking. It’s a bit more complicated compared to the direct payments people make when parking a car or riding the bus. Still, the ongoing costs of these commuting options, including the use of highly popular bike-sharing programs, can and should be incorporated into the IRS tax code.

What to watch

Flexibility across modes at the local level. The FAST Act reserves $48 billion for transit and $205 billion for highways, while allocating $850 million in dedicated funding for active transportation through the Transportation Alternatives Program (TAP). TAP is the only program in the bill without built-in adjustments for inflation, which means its funding can’t grow over time. FAST also gives local decision-makers flexibility to shift up to 50 percent of their bike/walk funding to other kinds of projects. This is particularly concerning given that dedicated bike/walk funding already represents a tiny portion of total federal funds. But local decision-makers should note that, in Minnesota and nationwide, communities are clamoring for more safe biking and walking options, not less.

Movement away from user fees. At the federal level, we have moved quite far from the highly popular notion of user fees paying for transportation infrastructure. As Minnesota lawmakers weigh options for increasing state investments in transportation, this is one area where we hope they don’t follow the FAST Act’s lead. FAST relies on $75 billion in general taxpayer dollars over the next five years. In addition, the past seven years saw almost $75 million transferred from the nation’s general fund to the Highway Trust Fund. In the long run, this shift in funding philosophy may not prove the most sustainable when the next federal transportation bill comes due in 2021.

For more on the FAST Act, check out the synopsis from Transportation for America. Related articles from the Safe Routes to School National Partnership and Streetsblog are also worth a quick read.

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