Dayton transportation plan calls for tax on Minnesota wholesale gas

Gov. Mark Dayton's $11 billion transportation proposal to fix the state's most decrepit roads and bridges over the next decade and improve transit would also sock Minnesotans with significantly higher gas taxes at the pump and some with a higher sales tax.

In a far-reaching plan, Dayton on Monday proposed a 6.5 percent gross receipts tax on gasoline at the wholesale level, meaning drivers would pay an extra 16 cents a gallon at current prices. But as gas prices rise, so would the wholesale tax. At $4 per gallon, the wholesale tax would be 22 cents. That would be on top of the existing state gas tax of 28.5 cents per gallon.

To fund mass transit improvements, the governor is asking for a half-cent increase in the sales tax for the seven-county metro area.

Dayton conceded Monday that "no one wants to pay more taxes. But conditions and congestion will keep getting worse until we do something about it."

Metro-area motorists would pay an estimated $24.50 per month for road and transit upgrades, depending on how much they drive or buy. Those outstate would pay an additional $15 per month, according to Dayton's estimates.

The money raised would pay to upgrade 2,200 miles of state roadways, and repair or replace 330 aging bridges. Transit projects funded by the sales tax would include the controversial Southwest light-rail line linking ­Minneapolis to Eden Prairie. (A Senate DFL plan proposes a ¾-cent increase in the tax, a key financing tool for bus and light-rail.) In addition, the state's general fund would provide $120 million for transit projects in greater Minnesota.

Dayton's multimodal salvo was quickly derided by Republican legislators, who said new taxes and fees will "disproportionately impact poor and middle class families." Senate GOP leader David Hann of Eden Prairie said there are ways to increase funding for roads and bridges without raising taxes, a concept that Dayton said "doesn't reflect reality."

There appears to be vast disagreement over the scope of the transportation problem, and how much it would take to fix it.

Rep. Tim Kelly, who chairs the House Transportation Committee, said, "It seems like we're having two different conversations here." He said more time is needed to study the issue and reach agreement on solutions.

Minnesota has the nation's fifth-largest highway system, with about 140,000 miles of state, federal and local highways — but conditions rank in the bottom third nationally. A panel of transportation experts convened by Dayton in 2012 said about $6 billion in new money is needed over the next decade just to keep the state's current system of roads and bridges in working order.

The Capitol debate is mirrored by a similar conversation heating up in Washington. The U.S. gas tax of 18.4 cents a gallon has not gone up since 1993, and revenue has been flat in recent years due to more efficient cars and fewer drivers.

Transportation Commissioner Charles Zelle said the state's roads were built for baby boomers during the 1960s and 1970s, but now are in dire need of care. More than half of the state's roads are more than 50 years old, and 40 percent of the state's bridges are more than 40 years old. In the next three years, 20 percent of Minnesota's roads will "pass their useful life," Zelle said.

House Republicans released a plan earlier this month that would tap the state's projected budget surplus and shave spending at MnDOT to fund $750 million in repairs over the next four years.

Janet Moore • 612-673-7752