Transportation funding efforts could bring gas tax increases

by T.W. Budig
ECM Capitol reporter

They’re picking up where they left off, House Transportation Policy Committee Chairman Ron Erhardt, DFL-Edina, said.

Cheered by transportation funding advocates, Erhardt on Tuesday, March 5, presented a $3 billion transportation funding package — the most ambitious in years. He appeared on behalf of the League of Minnesota Cities and Metro Cities in favor of the bill.

A veteran and arguably a political casualty of transportation funding fights at the State Capitol, Erhardt called the legislation, promising billions but containing a variety of tax increases, a “balanced approach.”

“And that’s what I think is absolutely necessary,” Erhardt, who, as a former Republican, provided a key transportation funding override vote, told his committee.

The benefits of the 2008 transportation funding initiative have begun to wane, he explained.

The new legislation, as Erhardt noted, has a lot of moving parts.

It would phase-in a nickle increase to the state’s 28.5-cent per gallon gas tax.

The bill would raise the tax on propane and liquefied natural gas by several cents over three years.

License tab fees would increase, and the flat tab fee paid on older vehicles would increase $10 under the bill.

The legislation proposes to expand the state sales tax to automotive parts and services, slating half of the revenue to highways, with the remainder split between metro and Greater Minnesota transit.

The current quarter-cent metro area transit sales tax could increase to three-quarters cent under the bill.

The half-cent increase, which would capture at least an additional $100 million a year for metro transit and $100 million a year for county highways, could be approved with a county board vote.

In addition to authorizing a wheelage tax statewide and removing a $5 cap, the bill would allow counties in Greater Minnesota to levy the existing local optional sales tax for transportation by county board resolution alone — no referendum needed.

Ten pro-transportation groups, ranging from the Transportation Alliance to unions, took a stand to back the legislation.

Edina Mayor Jim Hovland in a House committee on Tuesday, March 5, speaks in support of a transportation funding bill carried in the House by Rep. Ron Erhardt, DFL-Edina, seated next to the mayor. (Photo by T.W. Budig)

Edina Mayor Jim Hovland in a House committee on Tuesday, March 5, speaks in support of a transportation funding bill carried in the House by Rep. Ron Erhardt, DFL-Edina, seated next to the mayor. (Photo by T.W. Budig)

“We could be about to enter a Golden Age of transportation in Minnesota,” Edina Mayor Jim Hovland said.

Hovland urged lawmakers to pass the bill essentially as it is.

“There’s always resistance with the gas tax,” Hovland said.

Former Anoka County State Senator Steve Novak, transportation and capital bonding lobbyist with the Minnesota Inter-County Association, called the legislation “a complete bill.”

“This is probably the best public/private partnership you can find,” Novak said of transportation funding.

Association General Contractors Tim Worke spoke of the creation of thousands of needed transportation construction jobs.

No action was taken on the bill, with the committee expected to take up discussions again on Wednesday, March 6.

Rep. Jim Newberger, R-Becker, argued the proposed gas tax increase in the bill would hurt the trucking industry. (Photo by T.W. Budig)

Rep. Jim Newberger, R-Becker, argued the proposed gas tax increase in the bill would hurt the trucking industry. (Photo by T.W. Budig)

Rep. Jim Newberger, R-Becker, while saying there were some good ideas in the bill, argued the proposed gas tax increase would hurt truckers, shippers and delivery guys.

“It will wipe out their (profit) margins,” he said.

Erhardt countered by saying transportation was key to economic growth.

If Newberger had a better plan, offer it, Erhardt urged.

“We’d be happy to hear it,” he said.

Democratic Gov. Mark Dayton in his transportation budget proposed increasing the metro-wide transit sales tax, but didn’t offer the array of revenue raisers contained in Erhardt’s bill. Dayton has repeatedly indicated he doesn’t favor a gas tax increase.

According to the Department of Revenue, increasing the gas tax by one cent brings in an additional $31 million.

The governor’s transportation finance advisory committee late last year suggested increasing the state gas tax to 40 cents over 20 years.

 

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