DFL deficit: Northern Lights Express axed to pay for unemployment benefits for hourly workers
Back in 2023, that “historic” “trifecta” voted to spend $200 million on the Northern Lights Express (NLX), a passenger train service running between Minneapolis and Duluth. I doubted that this would be enough: “[A]t some point in the not-too-distant future,” I wrote:
…the project’s advocates will be back at the capitol rattling the begging bowl, peddling the sunk cost fallacy, and saying that having wasted so much money so far, our only option is to waste some more.
At that point, legislators should deep-six the whole thing. We might get lucky and maybe they will do exactly that.
We seem to have reached that destination, albeit via diversion.
DFL deficit
It isn’t so much that the NLX has run out of money as that the state government has run out of money. In November 2024, Minnesota Management & Budget forecast a state government budget deficit of $3.5 billion in the 2028-2029 biennium, or $5.1 billion if you account for inflation. By February, the forecast budget surplus for the 2026-2027 biennium fell by $160 million — from $616 million in November to $456 million — and the forecast deficit for the 2028-2029 biennium is up to $4.0 billion, or $6.0 billion if you account for inflation.
This session, legislators in St. Paul have been working to fix this mess. Last week, Governor Walz, Senate Democrats, and Republicans and Democrats from the House, announced an agreement on spending targets for the upcoming two biennia, a crucial step towards getting a budget deal done. I noted that the deal seems to fully fund summer unemployment insurance four hourly workers — also passed in that “historic” session — for the next two years, which “seems to indicate that the state will fund this mandate rather than pass it on to local governments to fund with property taxes.”
But how would the state government pay for that?
Last Train to Duluthville
They will pay for it by chopping the NLX.
Kare 11 reports:
Votes this weekend at the Minnesota State Capitol could put a proposed passenger rail connection between the Twin Cities and Duluth on the fast track to cancellation.
Both the Minnesota House and Senate voted to strip funding from the proposed Northern Lights Express, as lawmakers worked to finalize business in the waning hours of the 2025 legislative session.
The bill calls for redirecting $77 million in funding from the rail project to fund unemployment insurance for seasonal workers in education.
About $108 million in state funding remains for the Northern Lights Express, according to Republican House Transportation Committee Chair Rep. Jon Koznick; but he says this weekend’s legislative action is likely the end for the rail project.
“With the House and Senate voting to shift a significant amount of the state’s share of the project’s funding, the Northern Lights Express train is effectively dead, and taxpayers are better off because of it,” Koznick said in a statement, calling the project one of the latest “wasteful rail projects that Minnesotans barely use and can’t afford.”
Rep. Koznick is correct. The NLX would have provided a slower, more expensive method of getting between two fixed points in Minnesota; it would have been of even less use for people trying to travel to or from any other point in the state. It was never likely to succeed. Hopefully, the days of shoveling taxpayers’ cash into its firebox are over.