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Transportation tax increases rolling on in Minnesota

  • Article by: Pat Doyle
  • Star Tribune
  • April 18, 2013 - 6:23 PM

Support for raising taxes for transportation has stalled in the Legislature, but the ideas aren’t dead.

A proposal to raise metro sales taxes for bus and rail transit in the Twin Cities advanced Wednesday as its supporters kept it alive despite recent setbacks.

And a proposal to raise highway revenue by imposing fuel taxes on oil companies at the wholesale level replaced an earlier plan to raise the gasoline tax. The gas tax would decline under the new proposal, though it was unclear whether motorists would see savings.

Last week, House and Senate transportation bills excluded both a sales tax increase for metro transit and a gasoline tax increase for state highways. DFLers backed off plans to raise the taxes after Gov. Mark Dayton repeated his opposition to a gas tax hike. Legislators said they believed that it would be difficult to gain support for raising the sales tax for transit without raising the gas tax for highways.

But on Wednesday, the House Government Operations Committee advanced the sales tax proposal, allowing it to survive until later in the session.

“This will be subject to an evolving process in the transportation bill,” said Rep. Frank Hornstein, DFL-Minneapolis, a supporter of the sales tax proposal and chairman of the House Transportation Committee. “We don’t know if this will be included or not.”

His version would raise sales taxes from a quarter-cent to three-quarters of a cent in Hennepin, Ramsey, Anoka, Dakota and Washington counties. A three-quarters-cent sales tax would be imposed for the first time in Carver and Scott counties.

Dayton wants to impose a half-cent sales tax for the first time in Carver and Scott counties and increase a quarter-cent transit tax to three-quarters cent in the other five counties.

A Carver County legislator, Rep. Cindy Pugh, R-Chanhassen, asked proponents Wednesday about how the transit sales tax would be imposed in her county.

Pugh said her constituents are “concerned about this potential sales tax,” and she sought assurances that the county would get an adequate share of the revenue to maintain bus transit.

Hennepin County Commissioner Peter McLaughlin, who heads a panel that distributes some of the sales tax revenue, told Pugh that the metro counties get guaranteed payments and have proportionate voting rights.

The transit sales tax increase also surfaced Wednesday in an amendment to Senate legislation, along with the proposal for imposing a 5.5 percent wholesale fuel tax on oil companies. The legislation is backed by Sen. Scott Dibble, DFL-Minneapolis, chairman of the Senate Transportation Committee.

The fuel tax hike would be combined with cutting the gas tax by 6 cents a gallon and result in a net increase of $220 million in overall revenue for highway. But it was unclear Wednesday whether drivers would experience a decline in prices at the pump or whether oil companies would pass along the fuel tax.

A spokesperson for Dayton said Thursday that he has not had time to review Dibble's proposal, but the governor "is not interested in a proposal that would raise the cost of fuel for Minnesotans."

 

Pat Doyle • 612-673-4504

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