Crisis time for Minnesota transportation spending?

Published 10:52 am Friday, February 13, 2015

By Catharine Richert, 90.1 FM

If you believe what supporters of a massive transportation funding bill say, this legislative session is a do-or-die moment for Minnesota.

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“If people can’t get to work, and they can’t get their kids off to school and activities, talented people are going to find someplace where they can,” said Gov. Mark Dayton as he unveiled his 10 year, $11 billion transportation funding plan, which includes a new gas sales tax amounting to at least 16 cents per gallon.

“If business entrepreneurs and business owners can’t get their goods and products to markets without exorbitant delays and costs, they’re going to expand somewhere where they can,” he said.

If Dayton’s argument sounds familiar, it is. It echoes some of the same points Republicans make about higher taxes leading to an exodus of high-income earners and business to lower-taxed states, one that economists say holds little water.

There’s some truth to Dayton’s claims. But he’s also exaggerating the issue to make a political argument.

Evidence exists that younger people want better access to buses, trains and other forms of mass transit. A recent survey of millenials, people 18 to 34 years old, conducted by the Rockefeller Foundation, and that included the Twin Cities metro, found that more than 50 percent of the people they questioned would consider moving if it meant it was easier to get around without a car.

But do people leave a state because it doesn’t have good transportation options?

At least in Minnesota, state demographer Susan Brower said it’s difficult to tell. What Brower can say with some confidence is that the people most likely to leave Minnesota are in their late teens or early twenties.

“Mostly likely they leave because they are choosing to move out of state,” she said. “That’s also the time when people are freest to get up and try out new places or are able to travel across state lines for a new job.”

There’s also not much evidence that businesses leave Minnesota because of transportation issues alone or that they are particularly unhappy with the condition of the state’s transportation system.

An annual survey conducted by the Minnesota Chamber of Commerce, which is pushing for a smaller transportation bill that doesn’t include a tax increase, shows more than 60 percent of the group’s members say Minnesota’s roads have improved, and 75 percent believe the state’s roadways will serve their businesses well over the next 10 years.

Still, transportation experts say there are clear and important economic benefits to businesses and communities when roads, bridges and transit systems are robust and well-maintained.

For instance, when Minnesota invests in highways and local roads, the property tax base goes up, said Jerry Zhao, a professor of public finance at the University of Minnesota’s Humphrey School of Public Affairs.

His research suggests that for every $1 spent on a local road, the property tax base goes up by nearly $2. State highway investment boosts the property tax base, too, he said.

The Minnesota Department of Transportation points out businesses tend to migrate to parts of the state where roads are expanding — for instance a new Target Corp. headquarters on highway 610 in the northwest metro. The department also says that transportation is a top consideration when businesses are deciding to relocate.

Lee Munnich, a senior fellow at the Humphrey School who studies clusters of industries across the state, said bad roads or lack of access to rail and air transportation can have a very real impact on a company’s bottom line.

Nearly all of Minnesota’s companies rely on road transportation to do businesses. And while most of the companies Munnich has interviewed for his research say they’re satisfied with Minnesota’s road network, they worry it will get worse.

“It’s not just having the road, it’s having good quality roads,” Munnich said. “If you’re driving a truck and you’re driving on a bouncy road, you can damage the products, you can upset the baby pigs you’re transporting.”

But Joseph Schofer, who is a professor of civil engineering and transportation at Northwestern University, said transportation costs aren’t the only reason a company settles in a particular state. He said many other factors are important, too, including education, location and access to land, labor and materials.

“If you lower the cost of doing business for a firm, that may keep the business in the area,” he said. “If logistics costs are low enough, you might steal a business from congested Chicago and move it to Minneapolis. It happens, because transportation costs matter … But transportation costs alone are not the only factor.”