for PDF format
of Meeting with Tim Flaherty & Holly Biron
Civic Caucus 8310 Creekside Circle,
Friday, July 14, 2006
speakers: Timothy Flaherty and Holly Biron,
lobbyists, Coalition of Greater Minnesota Cities
Verne Johnson, chair; Chuck Clay, Paul Gilje, Jim Hetland (by phone), John
Mooty, Wayne Popham (by phone), Clarence Shallbetter
Context of today's meeting:
Minnesotans in November 2006 will vote on a proposed amendment to the
state's constitution to dedicate all revenue from the state sales tax on
the purchase of new and used cars and trucks to highways and transit.
Currently, slightly more than one half of revenue from this source is
dedicated by state law to highways and transit. The balance is placed in
the state general fund and used for other state purposes. The Civic
Caucus has been conducting meetings with individuals and groups with an
interest in the amendment. Today we are meeting with representatives of
the Coalition of Greater Minnesota Cities (CGMC).
Verne and Paul introduced our guest speakers, Timothy
Flaherty and Holly Biron, lobbyists for CGMC. Flaherty has been with the
law firm of Flaherty & Hood since 1992. Previously he was with Briggs &
Morgan and before that, Holmes & Graven. Earlier he was lobbyist for the
Biron, a recent graduate of the Humphrey Institute of Public Affairs at
of Minnesota, has been with Flaherty & Hood since January 2006.
Comments and discussion--
In the comments by Flaherty and Biron and in discussion with members of
the Civic Caucus the following points were raised:
1. Background on CGMC--
The CGMC has been in existence since 1984. It currently has 69 cities
outside the seven-county metropolitan area in its membership.
2. Opposition to the
constitutional amendment-- The CGMC believes the
proposed amendment to dedicate the motor vehicle sales tax (MVST) should
be rejected by voters for these reasons:
(a) The state needs a comprehensive plan to fund
transportation, not just this piece-meal approach.
(b) The amendment is unnecessary. The
Legislature and Governor can accomplish the objectives of the amendment
without resorting to a constitutional amendment.
(c) The amendment doesn't guarantee any funding
for highways; only transit funding is guaranteed.
(d) The amendment will shift dollars from the
state's general fund, which pays for such services as education, health
care and property tax relief, with no provision for replenishing the
(e) The amendment will mislead voters into
thinking that 60 percent of revenues are guaranteed for highways.
3. Limit state transit funding-
In the event the amendment is adopted, CGMC believes the Legislature
should limit transit funding to 40 percent of MVST revenue and to
transit's current level of state general fund dollars. Any additional
transit funding, CGMC believes, should come from local sales taxes, such
as a half-cent metro sales tax.
4. Local governments prohibited
from spending funds on campaigning for amendments-- Flaherty
distributed a letter from Carla Heyl, deputy state auditor, dated June 21,
2006, stating that cities and other local government are prohibited from
spending funds to advocate adoption or rejection of proposed
constitutional amendments. The state auditor's letter cited past
Attorney General's opinions and court cases. One court case notes that
public tax dollars "belong equally to the proponents and opponents of the
Flaherty said it is legal for city governments to pass
resolutions and distribute their positions but they can't join in any
advocacy effort. Thus the CGMC will respond to requests to outline its
position but CGMC will not be conducting any campaign on the amendment nor
participate in any group that is campaigning.
5. Amendment is a piecemeal
approach-- The amendment creates an illusion that
transportation needs will be satisfied, but an additional $300 million
that the amendment is supposed to provide would meet only 18 percent of
the needs for transit and highways. What will happen is that the
amendment will remove pressure for a real solution, Flaherty said.
6. Ballot language is
misleading-- The ballot language creates an impression that 60
percent of the funds would be for highways. But that is not the case.
The only guarantee is that transit gets at least 40 percent and that
highways would get 60 percent at the most. A Civic Caucus member
inquired whether the concern of CGMC is that metropolitan area transit
will get more and highways will get less. Flaherty replied that his
group believes that metro transit is under-funded but that the increased
dollars should come from a revenue source within the metropolitan area,
such as a regional sales tax. Nationally, Flaherty said, about
metropolitan transit systems receive about 22.5 percent of their revenue
from the state. In Minnesota metro transit receives 62 percent of its
revenue form the state. You need to realize too, he said, that many
unfunded highway needs exist in the non-metropolitan parts of the state.
7. Failed efforts to guarantee
60 percent for highways-- Biron summarized unsuccessful efforts
in the 2006 Legislature to provide a "hard" 60-40 split for highways and
transit. Bills to that effect were passed in both the House and Senate
and, therefore, were in both bills that entered the Conference
Committee. However, a strong pro-transit group was appointed from the
Senate to the Conference Committee, which was unable to reach agreement.
Hence the final outcome was that language adopted in 2005 remains in
effect--at least 40 percent for transit and up to 60 percent for
8. Possible damage to the
general fund-- Some cities that are part of CGMC aren't as
concerned about the MVST revenue as they are about the state's general
fund losing money should the amendment be adopted. They wonder where the
Legislature will turn for funds to replace the funds that would be lost
from the general fund. Official forecasts indicate that the hole in the
general fund would be filled by normal growth in revenues, but such
forecasts are very speculative.
9. Use of MVST funds for
bonding-- A questioner noted that some supporters of the
amendment would use MVST funds for bonding. Flaherty said that CGMC
generally prefers pay-as-you-go. CGMC would support bonding if a new
revenue stream were provided to pay off the bonds. Another questioner
noted that advocates the MVST amendment have cited a need for long-term
revenue stability for building highways. Flaherty said the amendment
won't provide any more revenue stability for highways than is available
Paul Pioneer Press editorial--
Copies of an editorial in the St. Paul Pioneer Press for Monday, July 10, 2006,
were distributed. The editorial criticizes the fact that no plan is in
place to replenish the state's general fund if all MVST money is
transferred to transportation.
11. Desirable to separate
highway and transit funding policy?-- A member asked whether
the state would be better off if the Legislature acted separately on
transit and highway funding legislation, rather than trying to combine
12. Risk of transit funds being
consumed by operating deficits-- A member said some people have
unrealistic expectations that the MVST money will provide the needed funds
for LRT. But as a practical matter, the member said it appears as if most
of the transit money will go to pay the operating deficit--the difference
between expenses and fare box revenue. Flaherty said he agrees with that
assessment. Already about $200 million in state general revenue fund
money is earmarked annually for metropolitan transit, he said.
13. Principal argument against
the amendment- Asked about the CGMC's main concern with the
amendment, Flaherty said it is the absence of any guarantee of funding for
14. Campaigns on the
amendment-- Flaherty said the proponents have announced a $4
million vote yes campaign. He knows that some legislators will be
speaking against the amendment. He doesn't know of an organized vote no
campaign but it is possible that some mayors might seek private funding
for such a campaign. Asked which legislators are likely to speak out in
opposition, he mentioned Sen. Thomas Bakk of Cook, Sen. Rod Skoe of
Clearbrook, and Rep. Thomas Rukavina of Virginia.
15. Funding for
non-metropolitan transit-- On the distribution of the 40
percent or more that would be given to transit, Flaherty said the
Legislature will make that decision. The CGMC is working for 5 percent
for non-metro transit and 35 percent for metro transit. Others in the
metro area want as much as 38 percent for transit. A 36-4 split appeared
in some statutory language.
It was agreed that accessibility, not reducing congestion or
influencing development, is a main justification for non-metro transit.
In the metro area, most discussion focuses on congestion relief and
influencing development, although accessibility is important for large
numbers of metro area residents. That is particularly true for persons
who rely on the bus system and whose accessibility will not be enhanced,
and possibly could be restricted, with LRT.
In the continuing discussion of transit, Flaherty agreed with
a member's comment that large numbers of people are unaware that less than
15 percent of work trips in the metropolitan area terminate in the
downtowns of Minneapolis and St. Paul combined.
16. Need for a comprehensive
strategy-- A member asked whether the CGMC has developed a
comprehensive transportation strategy for the state, including transit and
highways, along with recommended revenue sources. Flaherty said that such
a proposal has been prepared, with CGMC support, but that a "no new tax"
attitude by the Governor and some legislators has not made the proposal
workable. A suggestion was made that perhaps a governor-appointed
commission could come up with a workable plan. Flaherty said CGMC
opposed one comprehensive plan because it was advocating different tax
rates in the metro area versus the rest of the state. Continuing this
discussion, Flaherty said his group supports a 10-cent-a-gallon increase
in the gasoline tax but suggested that perhaps a 5-cent increase that is
indexed to the price of gasoline would be better.
17. Other potential benefit-based revenues--
A member suggested that other revenues with connections to users and those
that benefit from construction are available. For example, when
interchanges and possibly transit stations are built, land values increase
considerably in the vicinity. No effort is made to capture a portion of
that windfall for the cost of construction. The member said such a
strategy is much better than turning to the general fund. Flaherty said
he agrees. Continuing this discussion, a member said that creative use of
the fare box also could be employed, by providing vouchers for lower
income persons while letting the fares rise, particularly in peak hours.
18. Is constitutional amendment a response to
polarization?-- A member asked whether the constitutional amendment is
part of a much larger problem, that of polarization and paralysis in
government. Perhaps, the member said, the amendment is being advanced
because it is increasingly difficult to get elected officials to cooperate
and reach consensus among themselves. Flaherty, who has been a lobbyist
since 1984, said that he senses a less cooperative, more hostile
environment with more extreme partisanship today. Biron and Flaherty
said too many legislators of different caucuses don't even know one
another. Flaherty illustrated the polarization problem by recalling how
Governor Ventura and the House and Senate settled a budget issue. Each
assumed responsibility for settling one-third of the problem, rather than
coming together and developing a comprehensive agreement.
behalf of the Civic Caucus, Verne thanked Flaherty and Biron for meeting
with us today.
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. Core participants
include persons of varying political persuasions, reflecting
years of leadership in politics and business.
A working group meets face-to-face to
provide leadership. They are Verne C. Johnson, chair; Lee
Canning, Charles Clay, Bill Frenzel,
Paul Gilje, Jim Hetland,
John Mooty, Jim Olson, Wayne Popham and John Rollwagen.