Minnesota legislators consider $77 million cut to planned Duluth train

Two years ago, the Minnesota Legislature set aside nearly $200 million to go toward a long-sought train between the Twin Cities and Duluth.

Now, as part of a bipartisan budget deal that legislative leaders and Gov. Tim Walz reached this week, legislators are planning to divert $77 million of that money to help pay for unemployment insurance for hourly school-year workers.

DFL lawmakers approved the payments in 2023 and intend to shift the program to school districts in coming years, but until then they are on the hook for their costs.

“As disappointed as I am to see this come from the Northern Lights [Express], I do believe that this is a worthy cause for it,” Rep. Erin Koegel, Spring Lake Park, said during a House Ways and Means Committee hearing Thursday afternoon.

Minnesota transportation officials and other supporters had planned to use the $195 million for a handful of rail projects in the state, including being the state’s match for federal dollars for the NLX project. The remaining balance in the account — about $118 million — still will be enough for that purpose, Koegel said.

The state Department of Transportation did not respond to questions from the Minnesota Star Tribune about the cut’s potential impact on the project. Commissioner Nancy Daubenberger had no comment when asked outside of a committee hearing room on the State Capitol complex Thursday afternoon.

Minnesota Republicans earlier this year had tried to divert all $195 million in state NLX dollars to highways, arguing the Trump administration was unlikely to fund rail here. The Federal Railroad Administration had signaled its support of the project under the Biden administration, and advocates are hopeful that support will remain under Trump.

While U.S. Department of Transportation Secretary Sean Duffy has targeted costly high-speed rail projects in California and Texas, he told a U.S. Senate panel this week that he’s “committed to the idea that we’re going to have great rail transportation.” State transportation officials are currently waiting to hear whether their application to a federal grant program was successful.

Despite federal uncertainty, Brian Nelson, president of the rail advocacy group All Aboard Minnesota, said raiding the coffers of the Northern Lights Express is a bad idea.

His organization and other pro-train groups, including Great River Rail and the Northern Lights Express Alliance, have lobbied Capitol leaders to express their dismay.

“The Borealis showed us that people want more passenger rail in Minnesota, not less,” Nelson said, referencing Amtrak’s Borealis service between St. Paul and Chicago that has surpassed ridership projections since debuting a year ago.

A spokesperson in Walz’s office said “given difficult budget circumstances and uncertainty around federal funding, conversations around the possibility of NLX are ongoing.”

Senate Transportation Committee Chair Scott Dibble, DFL-Minneapolis, told the Star Tribune that redirecting some state train money to unemployment insurance is the right move right now, but that he’s hopeful the rail project will still ultimately be successful.

“I fully support the state moving forward deliberately to make NLX happen,” he said.

The proposed cut in state funding is disappointing, said Jill Brown, spokeswoman for the Northern Lights Express Alliance. But she does not believe it’s a death knell for the project.

“It’s not over,” she said.

Star Tribune staff writer Janet Moore contributed to this report.