As Southwest LRT proceeds, questions remain about who will fund the budget gap

After more than $200 million was pumped into the Southwest light-rail line last month to see the $2.7 billion project into 2024, questions soon surfaced: How much more would be needed to finish the job? And where will the money come from?

The Metropolitan Council, the regional planning body that's in charge of building Southwest, must unearth up to $260 million more to finish the 14.5-mile line linking downtown Minneapolis and Eden Prairie. The project is about 70% complete and passenger service currently is slated to begin in 2027 — nearly 10 years behind schedule and double its original budget.

But the source of the additional funding remains stubbornly unclear. Some have suggested that legislators could tap Minnesota's ample $17.6 billion budget surplus to shore up Southwest. It's an idea that, not surprisingly, remains controversial.

"Absolutely not," declared Rep. John Petersburg, of Waseca, the Republican lead on the House Transportation Finance and Policy Committee. "Southwest's problems are related to people in the metro area. The rest of the state shouldn't have to bail it out."

Gov. Tim Walz is expected to release his budget on Jan. 24, but it's uncertain whether funds will be set aside for Southwest. Many constituencies across the state are eyeing the historic surplus for budgeting purposes, and Met Council spokesperson Terri Dresen said it's premature to comment on the governor's recommendations.

In his 2021 supplemental budget, Walz included $200 million to extend Blue Line light-rail service from downtown Minneapolis to Brooklyn Park, a move that critics characterized as tone deaf given Southwest's woes. But the budget item never went anywhere.

To date, Hennepin County has contributed more than $1 billion to the project, with the Federal Transit Administration (FTA) adding $929 million and other local sources making up the rest.

One of those local sources is the state, which has contributed $30 million to Southwest. An obscure law caps the state's contribution at 10% of the total capital cost for light-rail projects, but with Southwest's $2.7 billion price tag, that means the state could contribute up to $270 million.

Several legislators, including Minneapolis Democrats who champion public transportation, say they're skeptical of tapping the state's surplus for Southwest.

"This is a mess of the Met Council's own making," said Sen. Scott Dibble, DFL-Minneapolis, who chairs the Senate Transportation Committee. "As an independent entity, they can find the money, they can solve the problem."

Rep. Frank Hornstein, DFL-Minneapolis, who chairs the House Transportation Finance and Policy Committee, said he wants to see the findings of a special review of the Southwest project by the Office of the Legislative Auditor before making any major funding decisions. The state watchdog is expected to release the first of two reports examining the project's delays and cost overruns in February.

"There are a lot of transparency and accountability issues with the Met Council," Hornstein said.

Longtime Southwest critic Mary Pattock, a board member of the Lakes and Parks Alliance, a nonprofit group that sued the Met Council over the project, said she's unequivocally opposed to using surplus money to bridge the funding gap.

"The governor has proposed important, worthy — and legitimate — priorities such as public safety, child care, education, and even tax relief," Pattock said in an email. "I devoutly hope he does not sacrifice them on the Met Council's altar of arrogance and incompetence."

The recent debate over funding has pitted some members of the Met Council against select Hennepin County commissioners, with each saying the other should pay more.

Last month, the Met Council unearthed an extra $111 million from its coffers for Southwest. Most of it — $100 million — came from its share of federal COVID-19 relief money, funds intended to support the nation's transportation system during the pandemic.

Ryan Timlin, who heads the labor union representing Metro Transit's bus drivers, light-rail operators and others, was disappointed with the move. Though his members recently received a 5% pay increase, they didn't get the hazard pay they had sought for working through the outbreak as essential workers.

Metro Transit "is always looking at infrastructure, not the workforce," said Timlin, president of Local 1005 of the Amalgamated Transit Union.

Using federal COVID relief funds for "capital activities" like Southwest is permitted under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, according to the FTA. The money can also cover operating expenses and payroll, as long as employees have not been furloughed — not a problem for Metro Transit, which is desperately trying to hire drivers and operators to maintain service.

When the Met Council approved using COVID funds for Southwest, the lone dissenting vote came from Wendy Wulff, appointed by Republican Gov. Tim Pawlenty in 2009. She said Hennepin County officials weren't "fully invested" in the Southwest project, which is entirely located in the county.

The Hennepin County Board then tapped its transportation fund, fueled by a half-cent sales tax, to add another $100 million to the project.

The sole opposing vote came from Commissioner Kevin Anderson, whose district includes the northern and western suburbs. "With the state sitting on $17 billion in surplus and not coming forward and being a full partner on this, I can't support this," he said.

Commissioner Jeffrey Lunde approved the county's $100 million infusion but also was critical of the state's $30 million contribution. "It seems like ... there's only one checkbook, and that's ours," he said.

Critics often call for Southwest to be scrapped altogether, but Lunde pointed out that would require the council to repay the FTA nearly $1 billion and restore the corridor to a safe and functional condition.

"I think that's fiscally stupid and idiotic," Lunde said during a recent board meeting. "And it's inconsistent with our transit and climate goals."

Hennepin County Board member Marion Greene said a "holistic funding solution involving multiple partners" is needed to complete Southwest.

"We will continue working with our partners at the local, state, and federal levels to deliver this critical piece of our multimodal transit network, to carry our region and state forward," she said, adding Southwest "will deliver transformational value to our communities for generations to come."