Despite agreement on need, breakthrough on transportation spending at Capitol remains elusive

Republicans and DFLers at the State Capitol have been united in calls for a big spending boost on Minnesota's transportation infrastructure, but an enduring disagreement about how to pay for it is making progress unlikely for the second year in a row.

Leaders from the two parties say that an additional $600 million to $700 million a year is needed to both maintain the state's rapidly aging roads and bridges, and to add to it in key spots where population growth is outpacing what the system can handle.

"Everyone agrees there's an enormous need," Gov. Mark Dayton said Thursday.

But the DFL and GOP are mired in a protracted dispute over the best way to pay for it. Dayton and his DFL allies who control the Senate want to increase the state's gas tax by a few cents. House Republicans want to tap into the state's $900 million projected budget surplus.

With all 201 legislative seats on the ballot in November, what nearly everyone agrees on is that failure to make transportation progress in the legislative session that ends a month from now could carry political consequences. Predictably, both sides think the other party will bear the brunt of it.

"I don't want to go home without a road bill," said Rep. Dave Baker, a Republican whose Willmar district has swung between the DFL and GOP in each of the past three election cycles.

Still, Baker said he's convinced it can be done without raising money via a higher gas tax.

Specifically, Republicans want to take advantage of the surplus by diverting a handful of driving-related taxes — including a sales taxes on auto parts, and leased and rental cars — out of the state's general treasury and into a fund for roads and bridges. They also would use some of the state's borrowing capacity to help bankroll transportation projects.

Republicans forecast that their plan would ultimately add up to about $7 billion in additional transportation spending in the next decade. DFLers counter that relying on a large, ongoing infusion from the state treasury makes for bad financial planning since those dollars have traditionally been used to fund other state needs such as public schools and colleges, and health and social service programs.

Road and bridge construction and repairs are largely funded by the existing state gas tax, license tab fees, and other taxes and fees linked to road use.

"I don't want to put roads and bridges into competition with early childhood programs, and K-12 schools, and nursing homes and health care and everything else that depends on our general fund," said Senate Majority Leader Tom Bakk, DFL-Cook. "It'll never compete, because those transportation investments can always be delayed. Any time money gets tight, it becomes the easiest thing to kick down the road."

In addition, Bakk said, the recent decrease in the expected size of the budget surplus makes it even riskier to steer a big chunk toward transportation.

"The only math I can see working really well is the gas tax," said Sen. Scott Dibble, DFL-Minneapolis, chairman of the Senate Transportation and Public Safety Committee. Raising the gas tax would not be as unpopular as Republicans insist, Dibble said, arguing that daily fluctuations in the price of gas would leave any increase hard to detect.

"There's zero evidence it has political consequences," Dibble said. "You hardly notice it. Your constituents will see tangible improvements in their own life."

Even as both DFLers and Republicans alike hold out hope for a solution, both sides predict their opponents would get the blame if nothing happens.

Lt. Gov. Tina Smith has traveled the state in recent months trying to build support for the DFL's approach. She said she's found wide backing from city and county officials and business owners for a spending plan that pumps significant new money into transportation infrastructure, even if it includes a gas tax increase. She predicted that House Republican incumbents would pay a political price in November for inaction on transportation.

"I think they'll be asked, why didn't they get something done?" Smith said.

"The governor's argument just falls flat, to say we need this money to pay for something we already have money for," Daudt said. He later added: "I don't see a scenario where Democrats don't get blamed for this."

Even as they push for a portion of the surplus for transportation, House Republicans also want tax cuts this year. Bakk said they can't have both.

House Transportation Committee Chairman Rep. Tim Kelly, R-Red Wing, said he thinks there's slightly more support among his House GOP colleagues for a big transportation infusion than for tax cuts.

"I think it's probably 60-40," Kelly said. But that calculus changes if a gas tax is part of the package, he said.

Despite the bluster on both sides, legislators from the two parties hold out hope for some kind of breakthrough in the shrinking time frame of the current session.

Asked what he'd do if he had to choose between voting for a gas tax or going back to Willmar with no major progress on transportation, Baker said to ask him again in two weeks.

"What I will say is I'd be foolish to sit here and say I will not look at anything," Baker said. "But I am not in a position to say I think a gas tax is right at this point."