When Minnesotans fill up at the pump, they might be forgiven for thinking a state gas tax increase is already in effect. In January, when the legislative session began, gas was about $2.05 per gallon here. By last week, it had jumped to about $2.74, according to the U.S. Energy Information Association.
What have Minnesotans gotten for that 69-cent increase? Exactly nothing. The extra cost simply reflects the highly volatile nature of gas prices, which can bounce 10 cents or more in the course of a single day.
Meanwhile, as this state’s roads and bridges continue to deteriorate and potholes abound, its gas tax is stuck at 28.5 cents per gallon. Last raised in 2008, it is now among the lowest in the Midwest, with those of neighboring Wisconsin, Iowa and South Dakota all higher.
Gov. Tim Walz’s initial proposal for a 20-cent hike over two years with an automatic inflation adjustment is just too steep an ask. Certainly the need is there, with roads rated D+ by the American Society of Civil Engineers and a $6 billion gap between anticipated revenue and the state’s growing must-do list of projects. The Walz proposal would raise $6.5 billion over 10 years. But the gas tax inflicts real pain on lower-income Minnesotans, particularly those who drive long distances and who, especially in rural areas, often lack public transit options. Businesses, too, would feel the pinch.
There is, we believe, a sensible middle ground that would go a long way toward creating stable funding for necessary repairs and improvements that has the added benefit of including ideas from both parties.
Republicans in 2017 shifted half of the auto parts sales tax proceeds from the general fund to roads and bridges. Starting this year, that amount is fixed at $145.6 million annually, according to statute. The shift took funding from the pot used to fund schools, health care and other general-fund obligations, and it will not grow over time, but it does provide a dependable stream of road money that bonding does not. And it is unaffected by growing fuel efficiencies.
Walz told an editorial writer that he stands ready to compromise with Republicans. To that end, we respectfully suggest he drop his proposal to shift that money back to the general fund. About 7 cents of his gas tax proposal would have gone toward that effort.
Republicans, for their part, should be satisfied with cutting the governor’s proposed gas tax increase in half, to 10 cents, phased in over two years. That plus the auto parts revenue would provide roughly $4.5 billion over 10 years. Carefully applied, that could take Minnesota far and allow for careful planning over time. The biennial bonding exercise of jockeying for capital investments, which also balloons costs through decades of interest payments, has been relied on too heavily of late.
According to Minnesota Transportation Commissioner Margaret Anderson Kelliher, the state will be at its limit for such highway borrowing within four or five years. The Senate proposal contains only $200,000 in new appropriations for the 2020-21 budget. That is simply too austere. Road repairs are costly. The tab for one mile of one lane of highway is $1 million. And for better or worse, Minnesota has more road miles than all but four other states. According to the administration, half of those are more than 50 years old. Those roads cannot be permitted to deteriorate for another four years.
As always, it is instructive to see how other states grapple with such issues. In Ohio, Republican Gov. Mike DeWine just signed a 10.5-cent-per-gallon increase. Wisconsin Democratic Gov. Tom Evers is looking to push his state’s gas tax up to 40 cents per gallon, and House Republicans there have said a compromise may be possible. In March, Alabama Republican Gov. Kay Ivey signed a 10-cent bump that starts this year. She praised legislators in both parties for having “made a bold statement they are all in when investing in Alabama’s infrastructure.”
Minnesota Republicans weighing the pros and cons for their constituents might want to keep in mind that 40% of gas tax money goes to local cities and counties. The Department of Transportation website has a detailed breakdown of needed road and bridge projects by Senate district.
Let’s face it: No one wants to pay more at the pump. The state should be mindful of the taxpayers’ pocketbook, which is not bottomless. But neither can it shortchange Minnesotans when it comes to safe, modern roads and bridges.
That’s too high a price for low taxes.