Local bus service provided by Metro Transit could be drastically cut back should a Republican transportation proposal move forward at the Legislature, the Metropolitan Council said Monday.

The House transportation bill would result in a $122 million reduction in state funding for local transit service over the next two fiscal years, according to Met Council Chair Adam Duininck.

That would severely affect local bus service — the system’s workhorse — and could force the Met Council to raise transit fares to generate more revenue, an option that is already being considered.

But Republicans say their transportation proposal simply reflects budget realities facing lawmakers at the State Capitol, including a projected decline in motor-vehicle sales tax (MVST) revenue that helps fund transit. GOP leaders also noted there are a number of uncertainties regarding transportation funding on the federal and local levels.

“My best advice is to stay tuned,” said Rep. Paul Torkelson, R-Hanska, chairman of the House Transportation Finance Committee. “This conversation is ongoing.”

Even with an unspecified rate hike, Duininck said, the measure would force the regional planning body to cut transit service by 40 percent. That could involve paring or eliminating existing routes and hours for both bus service and light-rail transit, although he didn’t offer specifics.

Austin Gay laughed as he realized the bus was full when he got on Bus 5 in downtown Minneapolis, Minn., on March 27, 2017. Route 5 goes from Brooklyn Center to the Mall of America through downtown Minneapolis, Minn. Gay says he uses the bus three times a week and the bus is always crowded. ] RENEE JONES SCHNEIDER • renee.jones@startribune.com

“This will have a real impact on peoples’ lives,” Duininck said, noting that 80 percent of Metro Transit passengers use the service to commute to work or school. He was flanked by business leaders and transit advocates at a news conference on Monday.

Consumers pay a 6.5 percent tax when they buy a new or used vehicle, but revenue projections continue to fall because people are holding onto their cars longer. Moreover, big-ticket purchases like cars are sensitive to an uncertain economy.

The Met Council expects to collect about $273 million in MVST revenue this fiscal year.

Torkelson noted that the Met Council has been aware of the anticipated decline in MVST projections for months. “They should have made some adjustments,” he said.

Shifting costs

President Donald Trump’s proposed federal budget could eliminate critical matching funds for big-ticket transit projects like the proposed Southwest and Bottineau light-rail lines, which together would cost nearly $3.5 billion to build. Without these big projects on the books, the picture for transit funding would dramatically change.

In addition, the Counties Transit Improvement Board (CTIB), a key funder of metro transit projects that levies a local sales tax, voted to dissolve itself last month. That would, in theory, free metro counties to raise their own taxes by a quarter cent, raising more money for transit — and without further assistance from the state.

But CTIB Chairman Peter McLaughlin, a Hennepin County commissioner, said Monday that dissolution of the group appears unlikely as a key deadline approaches this week. All five metro counties must approve the breakup, and the Dakota County board has voted against it.

Currently, the state pays half the cost of operating the metro area’s two LRT lines, but the House transportation bill would shift those costs — about $50 million — to the metro counties.

McLaughlin said that Republicans “oppose LRT, and are the biggest fans of bus. But when the day comes to fund the bus system you can’t find them.”

The Met Council expected to enter this year with a $74 million deficit. This year the council expects to receive about $90 million from the state’s general fund, but the House bill would reduce that appropriation to zero by fiscal 2021.

Both the House and Senate bills will be debated at the Capitol in coming weeks, as lawmakers battle over transportation and transit funding, long a source of contention between the two parties. The Senate transportation bill keeps funding for the Met Council unchanged.

DFL Gov. Mark Dayton has proposed a half-cent tax to fund transit operations in the metro area.