Minnesota drivers would pay an additional 16 cents a gallon at current gas prices to help bankroll statewide transportation upgrades, a tax that would rise with the cost of fuel, under a bill the Minnesota Senate approved on Monday.

The Senate DFL’s transportation plan would raise about $11 billion in new money for roads, bridges and transit over the next 10 years — money its backers say is needed to patch up an aging, crumbling transportation infrastructure. Gov. Mark Dayton is pushing for a similar approach, which in addition to the gas tax increase includes hikes in vehicle registration fees and a Twin Cities sales tax increase for transit projects.

The Senate’s 36-27 vote for the proposal — the first tax increase vote of the 2015 legislative session — was largely along party lines. One DFLer, Sen. Dan Sparks of Austin, joined every Senate Republican in opposition. The bill’s passage sets up negotiations among Dayton, Senate DFLers and House Republicans, whose more modest, $7 billion transportation plan includes no tax or fee increases as well as very little money for transit in the Twin Cities.

“This is a war on congestion,” said Sen. Scott Dibble, DFL-Minneapolis, the bill’s sponsor. “This is a war on our lack of investment over 30 years. This is a war on potholes, and it’s an effort to invest in shared prosperity for this state.”

A succession of Republican senators blasted the tax increases in the bill, saying that while road and bridge improvements are badly needed, the state’s $2 billion budget surplus makes additional tax increases on Minnesotans unnecessary.

“You are going to disrupt economic growth. Low gas prices are helping this state to recover from the recession,” said Sen. Julianne Ortman, R-Chanhassen. She also criticized the plan as “a disgraceful tax on the poor,” arguing that low-income earners are least able to afford gas taxes that hit every taxpayer at the same rate.

How it would work

The so-called gross receipts tax on gas would come on top of the state’s existing fuel tax of 28.5 cents per gallon. The new receipts tax, first proposed by Dayton, would charge an additional 16 cents per gallon until pump prices hit $2.50 per gallon. Should gas rise above that level, the receipts tax would become 6.5 percent of the overall price at the pump. The percentage would be set yearly, after averaging the previous year’s per gallon price. So at $3 a gallon, the wholesale tax would be 19.5 cents. At $4 a gallon, it would jump to 26 cents a gallon.

Under the Senate plan, the vehicle registration tax would rise from its current 1.25 percent of a vehicle’s value to 1.5 percent. It also would add a $25 late fee per month for vehicle registration, capped at $100.

To pay for transit projects, the current quarter of a penny Twin Cities metro sales tax for transit would be hiked to one full cent in Hennepin, Ramsey, Anoka, Dakota and Washington counties. Most of that money goes to the Metropolitan Council for transit.

“We’re losing our young people,” Dibble said. “Why? Because they’re moving places with amenities, the kind of transportation choices they’re looking for.”

While DFLers were nearly united in backing the gas tax, a small tussle broke out between those from the western and eastern halves of the Twin Cities. It was prompted by an amendment from Sen. Bev Scalze, DFL-Little Canada, that will require 40 percent of proceeds from the metro transit tax be spent in the east metro. Political leaders from that half of the metro have long complained of being shorted in the distribution of transit projects; Scalze said she chose 40 percent because that reflects the population distribution of the Twin Cities.

“We’re not asking for more than what we pay,” Scalze said. “We’re just investing in the idea of equity for the future.”

Senators backed Scalze’s amendment by a vote of 41-21, with a handful of Republicans joining east metro DFLers over opposition from a number of Hennepin County lawmakers.

“This is a slippery slope, as they say,” said Sen. Terri Bonoff, DFL-Minnetonka. “If we devolve into a conversation that pits our communities against each other, none of us win in that situation.”

As senators tussled over how to pay for transportation projects, more than two dozen mayors and council members, from Minnesota cities large and small, said they need dedicated dollars to help them build and maintain local streets and bridges.

While they didn’t specifically endorse the DFL or GOP approach, the mayors noted that the Senate bill would raise about $57 million annually for local infrastructure using a $10 surcharge on license tab fees. The mayors, which included Minneapolis Mayor Betsy Hodges and St. Paul Mayor Chris Coleman, said state and county projects too often leave them with roads that they can’t afford to fix. The League of Minnesota Cities has collected resolutions from 184 cities across the state seeking state help in maintaining their streets.

The House also has a bill providing about $25 million for local streets, but that funding would go only to smaller cities that do not get Municipal State Aid funding. The League, and the mayors who spoke Monday, prefer that funding be distributed to large and small cities alike.

 

Star Tribune staff writer Kevin Duchschere contributed to this report.