Chamber's gas-tax stance draws little ado

Russ Bennett, a board member of the Minnesota Chamber of Commerce, rose to speak last week at the local Lions Club meeting about the chamber's support of the $6.6 billion, 10-year transportation package that was made law over Gov. Tim Pawlenty's veto.

"I figured I would be bloodied," said Bennett, a small-businessman from Willmar.

"I got applause, and a lot of it."

Mike Wigley, the founder of the decade-old Taxpayers League of Minnesota, a vocal anti-tax lobby, this week encouraged like-minded folks to drop their chamber memberships in retaliation for the organization's helping write legislation that includes a 5-cent-per-gallon gas tax hike by the end of this year and 8.5 cents by 2013.

Chamber CEO David Olson said that he's aware of two cancellations from the 2,400-member group.

"I expected more," he said.

In this case, the chamber led a coalition of business partners and others in support of the first increase in gas taxes in two decades, and helped craft a reasonable transportation package that will boost needed road and bridge repairs, as well as metro-area mass transit.

The package also was supported by the Minnesota Business Partnership, the lobby for Minnesota's 100 largest concerns.

David Beito, president of Northern State Bank of Thief River Falls and another chamber member, acknowledged that a majority of Minnesotans, as evidenced by polls, didn't want to pay an added 5 cents at the pump by this fall. After all, retail gas prices have doubled, thanks to global demand, speculation and the waning purchasing power of the dollar.

"We had discussed this with our members [for four years]," Beito said. "Business wanted to get something done.

"Nobody got everything they wanted in the bill. And that may be the best bill you can get," he added.

No one likes paying more of any kind of taxes. In fact, state and local taxes in Minnesota have declined in recent years as a percentage of incomes. And the income tax rate on the wealthiest Minnesotans also was lowered slightly several years ago.

In the end, Minnesota businesses came down more on the pay-as-you-go approach to road and bridge maintenance. Pawlenty's approach increasingly has used borrowing to fund road maintenance and expansion.

But, with increased debt, you simply defer payments. And much of that debt is repaid from the state general fund, which also underwrites education, health care and other basic state obligations.

Phil Krinkie, the former legislator who is now president of the Taxpayers League, argues that the higher gas tax just allows big spenders and their legislators to try and get more for their own pet causes in the bonding bill.

He cites the University of Minnesota, which complained that so much money was going toward roads and bridges that the U was getting squeezed.

Get priorities straight

"If we're going to borrow more money for more buildings at the university or for more hockey arenas ... the priority should have been more bonding for state roads," Krinkie said in an interview. "If we can raise user fees for roads, why not raise user fees for the University of Minnesota?"

I'm not going to defend the university. Last year, a priority was about $200 million in bonding for a new, single-purpose football stadium. If that's a priority for state economic development, I'm a multimillionaire.

Yet tuition has been going up steadily at state universities, and state funding has declined as a percentage of total cost. We should look at more consolidation and further streamlining of programs and priorities. Legislators are scrutinizing the U's latest request.

Long time between bumps

And remember: The gas tax hasn't been raised in 20 years. Inflation has eroded the current 20-cent-per-gallon tax, as construction costs have climbed. Congestion, bad roads and weak bridges have become a priority for employers who say transporting workers and products wastes too much time and contributes to lost productivity.

The bill also allows the seven-county metro are to impose a quarter-cent sales tax to fund more mass transit to the tune of about $100 million annually. Chamber lobbying kept this to half of what transit proponents wanted. Still, that funding will help take more people out of cars and put them on buses and trains. Mass transit ridership is rising in the Twin Cities area.

Moreover, raising the gas tax slightly will allow Minnesota to tap into millions of federal matching dollars for road improvement and congestion-reduction projects that it has missed in the past.

The chamber also worked in a provision that permits study and review of the Minnesota Department of Transportation's planning, bidding and construction to ensure that the agency and vendors are delivering value at reasonable cost.

"We did a lot to make this bill better," said the chamber's Olson, who took political heat for supporting a veto override of the Republican governor. "The all-or-nothing strategies of the last few years weren't working.

"Our members told us that the cost of doing nothing was more expensive than doing something."

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com