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Pawlenty road plan calls for heavy borrowing
December 22, 2004

Some legislators plan to introduce legislation to raise about $1.2 billion a year for the next 12 years from a higher gas tax and other funding sources. (Photo courtesy of Minnesota Department of Transportation)

Gov. Pawlenty on Wednesday proposed a 10-year, $7 billion transportation package. He says it will accelerate dozens of road and transit projects across the state. The plan wouldn't begin until 2007, and relies heavily on borrowed money. DFL leaders called it a credit-card financing scheme.

St. Paul, Minn. — Gov. Pawlenty's plan has two components. First, he wants the state to borrow $4.5 billion over 10 years for highway projects. And second, he's also proposing a constitutional amendment to dedicate money from the state's sales tax on motor vehicles to road and transit projects. Right now, that sales tax money goes into the state's general fund, and about half of it is spent on transportation.

Voters would have to approve changing the constitution on the 2006 ballot, and Pawlenty's plan wouldn't kick in until 2007. Pawlenty defended the delay, pointing out that the state transportation department is already working with $900 million from a transportation package passed in 2003.

	Pawlenty and Molnau

"And MnDOT is cranking out projects about as quickly as they can humanly do it. Now it's still not enough and we still need more, but that was more than anybody's ever done in modern history," he said.

Pawlenty opposes raising the state's 20-cents-a-gallon gas tax, which hasn't gone up since 1988. He says he would support putting a gas tax increase on the ballot, for voters to decide.

Groups ranging from the Minnesota Chamber of Commerce to the Association of Minnesota Counties are calling for a gas tax increase. Both of those groups called the governor's plan a good step. But the AMC's Jim Mulder says he's concerned about the plan's start date.

"The big challenge is if we wait for two years for the constitutional amendment, by the time the money starts flowing, we're not sure that we will not have fallen too far backwards," he said.

Minnesota counties are calling for a 10-cents-a-gallon gas tax increase. The Minnesota Chamber plans to release a transportation proposal in the next couple of weeks. Chamber officials say it will include a gas tax increase, but would put the matter on the ballot for voters to approve.

Senate DFL leaders blasted Pawlenty's plan for relying on borrowed money. Senate Transportation Committee chairman Steve Murphy of Red Wing says the plan simply saddles future generations with debt.

"Everybody knows that if you max out your credit card, sooner or later you have to pay it off. And we've always built roads on a pay-as-you-go system. Now we're breaking out the credit card, and we've shown that it doesn't work, and we want to do it again. That's just madness," Murphy said.

Murphy says MnDOT already had to delay two Twin Cities highway projects because anticipated federal money didn't materialize. Transportation Commissioner Carol Molnau says that's an unrelated issue, and she blames congressional inaction on a federal transportation bill.

But Pawlenty's plan does include some federal money. The bonds would be paid off by dedicating some of the future growth in the state's gas tax revenue, tab fees and federal trunk highway funds through the year 2038.

Republican leaders say the borrowing approach is fiscally responsible. House Speaker Steve Sviggum of Kenyon says an up-front infusion of money into road projects creates some savings.

"Whether the cheaper dollars is from interest rates, whether the cheaper dollars is from construction costs, whether the cheaper dollars is from steel costs, that certainly are going up, paying off these investments with cheaper dollars is a wise thing to do," Sviggum said.

Pawlenty's plan doesn't tie the money to specific projects, as the Minnesota Chamber plans to do. But it does outline some transit priorities, including the Northstar Commuter rail line, and some dedicated busways in the metropolitan area. Pawlenty says he also supports a transit connection in the "central corridor" between Minneapolis and St. Paul, either a busway or light-rail line.

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