Minnesota DOT staring at $50 billion budget shortfall

| 8/28/2009

It’s no surprise to hear about a state clamoring for more money for needed transportation work. For some, it could be a surprise to hear that 18 months after Minnesota lawmakers voted to boost the state’s fuel tax, the Department of Transportation is projecting that it still is facing a $50 billion funding gap during the next 20 years.

Tom Sorel, Minnesota’s transportation commissioner, told the Star Tribune that the agency acknowledges that it is unrealistic to entirely close the gap. Instead, he said MnDOT will need to focus more on preserving existing roads and bridges and be creative when it comes to funding sources.

In early 2008, the Minnesota Legislature overrode Gov. Tim Pawlenty’s veto of a 10-year, $6.6 billion transportation bill. It included an 8.5-cent-per-gallon increase in the gas and diesel taxes, which will be fully phased in by 2012. In addition to higher fuel taxes, roads, bridges and transit also received a boost from higher sales taxes and license tab fees.

Even though every 1-cent increase adds $30 million per year in revenue, it is a drop in the bucket when the state’s needs amount to tens of billions of dollars.

MnDOT has released its updated 20-year plan for highways, and there are more than $65 billion in needs with only $15 billion available to address them. The amount includes funds from the federal stimulus program.

Officials with the agency cite higher costs for materials and labor, which are only expected to increase the funding gap. To make matters worse, officials say, tax revenue is dipping as more fuel-efficient vehicles come onto the roadways and as people drive less because of the price of fuel.

In an effort to help get work done, funding options that are expected to get a look include charging drivers based on the number of miles traveled and public-private partnerships.

To view other legislative activities of interest for Minnesota in 2009, click here.

– By Keith Goble, state legislative editor

Editor’s Note: Please share your thoughts with us about the legislation included in this story. Comments may be sent to statelegislativedesk@ooida.com.