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Moving Forward: The Benefit of Transportation Investment to Minnesota's Economy

January 02, 2008 By Conrad deFiebre, Transportation Fellow

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On April 30, 1988, Minnesota made its last significant, sustained investment in transportation infrastructure – a 3-cents-a-gallon increase in the state gasoline tax that is dedicated solely to roads and bridges.

Since that day nearly 20 years ago, the tax at the pump has been stuck at 20 cents a gallon, eroded over time by inflation, overwhelmed by growing traffic congestion in the Twin Cities and deteriorating roadway quality and safety statewide. The deadly collapse of the Interstate 35W bridge on Aug. 1 offered a shocking lesson in the human costs of this neglect.

Another outcome has been less dramatically visible but more widespread in its negative impact on all Minnesotans: our shrinking economic competitiveness, especially in comparison with states and regions that have made the investments in roads, bridges and transit that are vital to prosperity in the 21st century global marketplace.

A recent federal study reported that two-thirds of U.S. metropolitan areas outpaced the Twin Cities in economic growth for 2005. Against a national metropolitan average of 3 percent expansion, the Twin Cities posted an anemic 1.4 percent increase.


For the first time in 30 years, Minnesota’s unemployment rate rose above the nation’s in 2007.  The state lost 17,400 jobs in the third quarter of 2007, sparking talk among economists of a state recession amid continued expansion of the wider U.S. economy.

The sudden swiftness of this decline has been breathtaking. Minnesota went from eighth in the nation in per capita personal income in 2004 to 14th just two years later.
Who’s overtaking us? Small states such as Delaware and Wyoming that are far outspending us on roads and bridges. Peer states like Colorado and Virginia that have invested more than Minnesota in highways and urban transit.  Even the biggest state, California, has moved ahead with the help of the nation’s highest gas tax and transit expansion in cities such as San Diego and San Jose.

Key Findings

  • Minnesota is falling behind economically in comparison with states that have made significant investments in roads, bridges and transit.  Taken together, our capital outlays for roads and transit placed 48th in the nation on a per capita basis.
  • Congestion costs the average Twin Cities rush-hour commuter $790 a year in wasted fuel and time. The average household would pay no more than one-third of that for Minnesota 2020’s transportation funding plan -- $270 – and possibly much less.
  • Although state-level taxes for transportation haven’t gone up in nearly 20 years, Minnesotans are paying nearly $1 billion more in property taxes for roads and bridges. That’s a poor alternative to traditional user fees on fuel and vehicles.
  • The Texas Governor’s Business Council reports that spending to reduce urban freeway congestion will produce eightfold returns to the public in job creation, business efficiencies, safety improvements and time savings.
  • Bold business leadership is needed to strengthen vital transportation infrastructure. Despite its advocacy of some half-measures, the Minnesota Chamber of Commerce has been an obstacle to serious progress on this front.
  • Modern transit attracts growing ridership, eases freeway congestion and spurs sustainable housing and economic development without feeding suburban sprawl.
  • Minnesota should increase its gasoline tax by at least 10 cents a gallon and index it for future inflation as the centerpiece of a wide-ranging transportation improvement plan that should also require local approval of other revenue sources.
  • Gov. Tim Pawlenty has stood in the way of economic growth for Minnesota by vetoing two bipartisan transportation funding bills. At the same time, his own Department of Transportation puts unmet needs for roads and bridges at $2.4 billion a year and his Metropolitan Council states: “Funding at current levels will result in significant increases in traffic congestion, delaying the movement of people and goods, reducing the region’s economic competitiveness and harming our quality of life.” 

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