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Proposed Gas Tax Hike Exposes Minnesota's Road Subsidy

After Minnesota's new Democratic Gov. Tim Walz proposed a 20-cents gas tax hike over two years, even leaders in his own party were caught off-guard, but one-third of the tax increase will replace the diversion of general funds to roads.
March 14, 2019, 10am PDT | Irvin Dawid
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Jacob Boomsma

"In pitching his plan, Gov. Tim Walz is unapologetic about what would be a big jump to the existing 28.5-cents tax on each gallon," states Brian Bakst in the audio version accompany his March 6 article for Minnesota Public Radio News.

"This is not a choice between having a gas tax or not," he said.

"It's a choice between living in a state with the best and safest transportation system in the country or living in a state with crumbling roads and bridges that risk our safety and keep away businesses."

While Republican legislative leaders, particulars those who control the Senate, were quick to seize on the size of the increase, some members of the Democratic–Farmer–Labor Party (DFL) were apparently caught off-guard.

"It's kind of sticker shock when you hear 20 cents right there," said House Tax Committee Chair Paul Marquart, DFL-Dilworth.

The main thrust of Bakst's piece is that rather than rather than looking at a 20-cents tax increase, similar to New Jersey's 23-cents per gallon gas tax increase, which took effect Nov. 1, 2016, it should be framed as four separate gas tax increases of five-cents per gallon, according to Marquart.

As proposed, additions to the tax would be spread out through 5-cent-a-gallon bumps — the first this September and the rest spread paced out about every six months. After that, Walz wants to connect the tax to some measure of inflation.

Gas tax hike would benefit all state programs, not just transportation

Gas tax revenues "are constitutionally dedicated to roads, bridges and some connected costs, such as the highway patrol," notes Bakst.

Transportation Commissioner Margaret Anderson Kelliher estimates that about 5 to 6 cents of the proposed 20-cent boost would get projects to ease congestion and improve safety features done more quickly.

She said 7 cents would be used to swap out transportation spending that now comes out of the general treasury, freeing up $450 million for other state-backed programs. The rest, she said, would pay off past highway borrowing or support new bonds.

The budget would "increase transportation funding for roads and bridges in counties and cities by 35 percent with much of that paid for with his gas tax hike," according to Bakst's earlier coverage of the Feb. 19 budget proposal which also includes higher registration fees and vehicle sales taxes.

As posted on Jan. 24, the ultimate size of the gas tax hike, should Walz be successful, may very well be half of what he proposed, as Marquart suggested to Bakst. Also noted in the earlier post was the chronology of former Republican Gov. Tim Pawlenty's three vetoes of legislative gas tax hikes in 2005, 2007, and 2008, with the legislature overriding the final veto, resulting in the last time the legislature agreed to hike the gas tax.

Other states to watch

"Gas tax proposals are on the table this year in Wisconsin, which has a Democratic governor, and Ohio, whose government is led by a Republican," adds Bakst.

Already approved increases will take effect this summer in Rhode Island, South Carolina (see post) and Tennessee (posted here)."

Related in Planetizen:

Hat tip to Bill Cramer, IBTTA Tolling Points.

Full Story:
Published on Wednesday, March 6, 2019 in Minnesota Public Radio News
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