Minnesota gas tax hike rejected

State Sen. Scott Dibble's campaign to raise money for highways and transit ran into political reality Wednesday as members of his own party halted his proposed tax increases.

The Senate Taxes Committee rejected the Minneapolis DFLer's bid to raise the gas tax by 7.5 cents a gallon for highways and increase the metro sales tax for transit by a half-cent.

The decision leaves the DFL-controlled Senate in the same position as the DFL House as they approach the end of the legislative session: proposing transportation packages without tax hikes.

After the Taxes Committee hearing, Sen. Ann Rest, DFL-New Hope, noted that DFL Gov. Mark Dayton opposed any gas tax increase right now.

Dibble, who has championed a gas tax increase as part of a broader transportation spending package, seemed resigned to fighting another day.

"We laid the groundwork this year," he said.

The Minnesota Department of Transportation says highways will face a serious shortfall in funding without substantial new revenues. Dibble touted a 7.5-cent hike in the gas tax to raise about $216 million in revenue a year for improvements to state and local highways. He also sought to raise the sales tax by a half-cent in Hennepin, Ramsey, Dakota, Washington, Anoka, Carver and Scott counties to provide $226 million in annual revenue for light-rail and bus transit development and operations.

It quickly became apparent Wednesday that Dibble's gas tax proposal was dead on arrival in the Taxes Committee. He barely had enough time to describe the highlights when Rest proposed a more modest version: a 5-cent increase phased in over several years, with a lesser sales tax increase.

But legislators had no appetite for that either. They took a brief recess, and when they returned Rest withdrew her proposal. Sen. Lyle Koenen, DFL-Clara City, then proposed maintaining the status quo on transportation spending — avoiding any increase in sales or gas taxes. It passed overwhelmingly on a voice vote and will go to the full Senate.

"If this is what the Tax Committee desires to do and has the votes to pass, so be it," Dibble told the committee, adding, "This would be a failure on the part of our state if this is all we can do this year."

He said there will be additional pressure to tap the state general fund for transit money if the metro sales tax isn't increased. And he noted that a transportation bill without tax increases already has failed in another Senate committee.

While Rest noted that Dayton might veto a gas tax hike, she didn't think a majority of senators would vote for the status-quo measure.

Dibble has stayed the course on increasing transportation taxes despite resistance from Dayton to a gas tax hike and the unwillingness of some other members of his party to cross the governor on the issue.

Chairman of a Senate transportation committee, he served on a task force Dayton appointed last year that concluded the state will need significant additional revenue in the next 20 years to "provide an economically competitive, world-class transportation system."

When Dayton renewed his opposition to raising the gas tax, Dibble countered with a new tax on wholesale fuel in hopes it would be more politically palatable. He dropped the idea amid concerns that oil companies would merely pass on the charge to motorists.

Dibble defended seeking the 7.5-cent gas tax increase after the Taxes Committee defeat. "There's been no strong proposal that's come forward on the part of the governor or anywhere else," he said in an interview afterward.

He said prospects for transportation tax increases this year are dim unless they become part of some broader deal between Dayton and legislative leaders.

"I feel like I'm building a movement," he said. "That takes time."