Plan calls for $20 billion in Minnesota tax hikes for roads, transit

  • Article by: PAT DOYLE , Star Tribune
  • Updated: November 30, 2012 - 11:07 AM

Dayton task force also would shift funding from state to local governments in its 20-year plan.

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A gas tax hike is among the options being proposed to increase funding for transportation and transit in Minnesota.

Photo: Darron Cummings, Associated Press

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Higher local sales taxes, gas taxes and vehicle fees are being pushed by Gov. Mark Dayton's task force on transportation and could help shape the debate on highway and transit funding as DFLers take control of the Legislature next year.

The draft recommendations call for raising taxes by $20 billion over 20 years and for shifting transit funding from the state to metro governments.

"It will be the beginning of a lot of discussion about transportation and transit finance in the next legislative session," said Susan Haigh, chair of the Metropolitan Council, which oversees Twin Cities transit. She said recommendations were expected to go to the governor by the end of this week.

Attempts to raise money for transportation met resistance during Gov. Tim Pawlenty's administration and from Republican lawmakers. But new DFL leadership of the House and Senate as well as the governor's office -- the first time in more than 20 years -- injects transportation funding proposals with new life.

Dayton created the task force a year ago amid growing calls to find new sources of revenue to pay for highways and transit. The Minnesota Department of Transportation (MnDOT) has warned that the state faces tens of billions of dollars in shortfalls.

Despite talk of such new strategies as taxation based on the number of miles driven, the panel proposed greater use of traditional revenue sources.

Gas, transit taxes

For statewide highways, the draft recommended increasing the gas tax to bring in an extra $15 billion and increasing the motor vehicle registration fees by 10 percent to raise another $1 billion.

For metro transit, the panel proposed a half-cent increase in the Twin Cities-area sales tax to raise $4 billion.

It also recommended trying to profit from expanding the MnPASS electronic tolling system instead of merely using its revenue to cover expenses.

A summary of the draft recommendations was released this week by the Metropolitan Council.

It did not detail how much the gas tax would go up under the proposal, but said that MnDOT was aware of highway funding recommendations.

MnDOT, which was represented on the task force, wouldn't comment Thursday on the gas tax recommendation or release a draft. MnDOT spokesman Kevin Gutknecht said the draft was still being worked over and "could be different" when released. All draft versions are public in Minnesota.

Dayton spokeswoman Katharine Tinucci said Thursday that "final drafts" of the recommendations would be released Friday.

But Haigh, who is a member of the task force, explained key elements of the draft during an agency presentation Wednesday on how the task force "voted to present the governor with ... recommendations."

She focused mostly on greater use of the metro sales tax to finance transit.

"It helps take the transit system funding out of the state general fund and allows us to really operate it without going back to the Legislature and competing with other needs," Haigh told other Met Council members.

She noted that the recommendations call for having the state fund 37 percent of bus and light-rail transit operations instead of its current 61 percent.

Fares would continue to pay for about 28 percent of bus and light-rail transit, with regional governments paying for the rest.

Haigh predicted the sales tax hike wouldn't be so high as to reduce the competitiveness of the Twin Cities with other metro regions.

Not all like tax shift idea

Not everyone on the task force was pleased with shifting transit funding from the state to local governments.

"There's a principle at stake," said Sen. Scott Dibble, D-Minneapolis, future chair of the Senate Transportation Committee. "What we do in the metro region around transit is of statewide importance. The full state ... should participate in that."

Dibble said he didn't expect major changes in the draft.

Another member of the task force, called the Transportation Finance Advisory Committee, said the recommendation to increase the gas tax could relieve demand on property taxes for road funding.

"If you're concerned about property taxes, this is a substitution of a user fee," said Hennepin County Commissioner Peter McLaughlin.

The 19-member panel included two DFL and two GOP legislators, the commissioners of MnDOT and the Department of Employment and Economic Development, as well as business and labor leaders. Neither of the GOP legislators -- Sen. Joe Gimse, R-Willmar, and Rep. Mike Beard, R-Shakopee -- returned calls about the recommendations.

Pat Doyle • 612-673-4504

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