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Travel By Car: Minnesota's Big Public Subsidy

July 08, 2009 By Conrad deFiebre, Transportation Fellow
Never mind the Hiawatha light rail line's 10 million annual passengers or the 8,000 new housing units built along the route from downtown Minneapolis to the Mall of America. The Hiawatha is supposedly a huge government boondoggle because it's "fleecing taxpayers" of $15 million a year in public subsidies.

That's the Gospel According to the Taxpayers League of Minnesota, the Merry Pranksters of the far right whose tunnel vision regarding transportation financing admits no view of the vastly greater tax subsidies going to travel by private car.

Start with the $1.5 billion a year in Minnesota property taxes (100 times Hiawatha's state support) that maintain county roads, local streets and bridges, a subsidy with no relationship to use of the system. Then throw in the $8 billion Congress and former President Bush appropriated from general funds last year to keep the federal highway trust fund solvent in the face of lagging gasoline tax collections.

Now the Obama administration is proposing an additional non-user $20 billion infusion to prop up the trust fund for the next 21 months. That's $18 billion for roads and bridges, $2 billion for transit.

There's more: Macalester College Prof. Sarah West and other economists have estimated the "externalities" of driving - costs that motorists don't directly bear for things such as environmental damage, collision casualties and military operations to secure petroleum supplies - at $1 per gallon of gasoline. That's a hidden subsidy for Minnesota motorists of more than $2 billion a year.

Current state-federal gas taxes in Minnesota total 45.5 cents a gallon, and nearly all of that goes to highway infrastructure. Meanwhile, the price imbalance from road-user subsidies and externalities drives the urban congestion that creates more inefficiency -- $78 billion annually in wasted fuel and time nationwide, according to the Texas Transportation Institute.

Further, the Minnesota Department of Transportation projects its costs over the next 20 years just to maintain existing state highways and bridges at $16 billion. The revenue expected over the same period is only $15 billion, mainly from fuel and vehicle registration taxes. MnDOT plans to spend $3.5 billion of that on new road projects.

That leaves $4.5 billion in deferred maintenance to pass down to future generations if the "conservative" ideal of no-new-taxes-no-matter-what holds sway.

Minnesota's evangelist-in-chief for that kind of shortsightedness is Taxpayers League President Phil Krinkie. St. Phil recently weighed in on these matters, branding the Hiawatha Line "a funding hole" that "will never be a success" and criticizing modest proposals to index the state gas tax for inflation.

"At 27 cents, we're not paying enough?" Krinkie cranked to the Duluth News-Tribune last week.

Actually, we're not, as documented above. And that may go double for somebody like St. Phil, a heating-cooling-electrical contractor whose Snelling Co. vans ply Twin Cities roads at super-bargain prices subsidized by the rest of us.

This is not to denigrate all those driving subsidies out of hand, but merely to put them in perspective with the relatively tiny ones that support transit. In fact, for two centuries, practically all forms of transportation in the United States, from the Erie Canal to railroads to commercial ports and waterways to airports, roads and bridges, have been heavily subsidized by taxpayers.

Why? Because this stuff is indispensable for the vibrant economy that gives the Krinkies of the world the luxury of denouncing taxes that don't even pay for all the benefits they are supposed to bring forth. It's time for whiners like St. Phil to recognize the bargain they're getting and quit begrudging millions of transit riders the much smaller public support they enjoy.

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