Bus subsidies raise conflict-of-interest questions

Published 10:14 am Wednesday, September 30, 2015

MINNEAPOLIS — Two bus companies owned by Transportation Commissioner Charles Zelle received nearly all of the state subsidies paid in the first year of a program for rural bus service, according to a report published Wednesday.

Jefferson Lines and Land to Air Express collected nearly $2.3 million in state and federal grants in 2013, accounting for more than 60 percent of their budgets for operating the subsidized routes that connect small communities with national bus routes, the Star Tribune reported, citing Minnesota Department of Transportation figures. Zelle’s companies got 98 percent, or about $441,000, of the available state funding that year.

Zelle resigned as CEO of Jefferson Lines before Gov. Mark Dayton appointed him as MnDOT commissioner in 2012, but he also joined the boards of the two companies, becoming chairman of Jefferson and retaining his ownership roles.

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Dayton spokesman Matt Swenson said Zelle’s roles were fully disclosed and that Zelle recuses himself as commissioner from decisions involving the companies.

Zelle conceded there’s an appearance of a conflict of interest.

But Mike Schadauer, director of MnDOT’s Office of Transit, said “there’s absolutely no connection” between the state funds and the commissioner’s connections with the companies. Without subsidies, the routes would be unprofitable, he said.