Republicans roll out $7B plan for roads that avoids gas tax hikes

Republican legislative leaders said Monday they have a plan to raise $7 billion over the next decade, without any tax increases, to pay for repairs to Minnesota's roads and bridges.

The GOP proposal, which House Speaker Kurt Daudt and other leading Republicans unveiled at a Capitol news conference, is a counterpoint to similar, 10-year transportation plans from Gov. Mark Dayton and Senate Democrats. The centerpiece of the DFL approach is a new state tax on gasoline at the wholesale level, along with higher license tab fees and a Twin Cities sales tax hike for transit, in order to fund nearly $11 billion in total projects over a decade.

Pointing to Monday's Star Tribune Minnesota Poll, which showed majority opposition to a gas tax increase, Daudt said the Republican plan would make roads and bridges a higher priority while not forcing a politically unpopular gas tax increase on drivers.

"We think this is what Minnesotans have been asking for," said Daudt, R-Crown. "They've been telling us they want an investment in our road and bridge infrastructure, and they don't want a gas tax increase."

The DFL and GOP transportation plans vary in many details and generate money for roads in different ways. But Dayton and leading DFLers said they were happy to see that Republicans were not arguing about the need for a major transportation package, but rather were engaging on the size. With less than two months in the current legislative session, leaders of both parties are finally talking about a 10-year, multibillion-dollar proposal, which improves the odds of some kind of major transportation spending compromise.

"I'm very appreciative that they have recognized this is a long-term problem that needs a long-term solution," Dayton said. He did take issue with many aspects of the GOP proposal, which would redirect more than $3 billion over 10 years from some existing sales taxes that now feed the general state treasury.

Republicans called this part of the proposal a "Transportation Stability Fund." Under the plan, road and bridge projects would draw funds raised by an existing sales tax on auto parts, a sales tax on rental vehicles and another sales tax on vehicle leasing. Republicans say those three pots of money could generate $3 billion over a decade for immediate repairs to roads and bridges, along with highway improvements in economically strategic areas.

Republicans would borrow $2.3 billion as part of their funding package, with a little more than half coming from highway bonds and the rest from general obligation bonds. The state Department of Transportation would be expected to save $1.2 billion in administrative costs over 10 years to free up road and bridge money. Another $228 million would be carved out of the state's projected $1.9 billion budget surplus.

Daudt said the sheer size of that projected surplus gives lawmakers room to direct some of it to transportation without severely shorting other priorities. But top DFLers, including both Dayton and Senate Majority Leader Tom Bakk, DFL-Cook, have been extremely reluctant to support spending general treasury dollars on roads and bridges, which traditionally have relied on dedicated funds, such as the existing per-gallon gas tax and other driving-related taxes.

Sen. Scott Dibble, DFL-Minneapolis, said that tapping the general fund for transportation might be tempting when times are good, but he said the downside is huge.

"In a few years we're going to have a downturn in the economy, and there's going to be a lot of pressure for competing priorities out of the general fund, and those priorities are going to prevail, as they should," Dibble said. "Things like public education, nursing home care, emergency services, basic services we provide through local government aid. It's not speculation — we've seen the Legislature dedicate general fund sources to transportation before, only to yank them back after a couple years." Nearly three-fourths of the state budget goes to just two areas: education and health care.

Another likely break point between the GOP plan and DFL priorities is transit. Republicans are proposing far less than Democrats, particularly for the Twin Cities area. Dayton proposed a half-cent sales tax increase in the metro area to raise several hundred million dollars a year in new money for transit projects, potentially including $120 million needed to build the proposed Southwest Light Rail line between Minneapolis and Eden Prairie.

Dayton said Republicans would have to be flexible on that point. "Transit's got to be part of the solution," he said.