Senate Democrats seek $800M more per year for transportation through new taxes, higher fees

ST. PAUL, Minn. — A new fuel surcharge and higher vehicle registration fees are key components of a transportation plan unveiled Monday that Minnesota Senate Democrats say will produce at least $800 million more per year for highway, bridge and mass-transit construction.

The proposal is worlds apart from an initial House Republican plan that relies on existing tax dollars and it received a cool reception from Republicans, foreshadowing the tough fight ahead to strike a substantial deal this session.

Senate Transportation and Public Safety Committee Chairman Scott Dibble, a Democrat, said Minnesota's clogged and deteriorating roads are costing motorists in lost time, slowed commerce, damaged vehicles and safety problems. He said lawmakers have spent too long "admiring the problem," which a task force has said amounts to a multibillion dollar project backlog over the next decade.

"A failure to act costs money," he said. "It's just whether you're going to pay out of your back pocket or your front pocket by doing a proactive investment."

The plan tacks a new 6.5 percent charge on gas purchases — on top of the existing 28.5 cent per gallon tax — and raises license tab fees by a minimum $5. For shoppers in the seven-county metropolitan area, they would see the general sales tax rise by ¾-percent to channel more money to transit.

Once fully phased in, the new taxes would generate more than $1.1 billion a year.

The extra revenue would help support another $567 million in borrowing for locally maintained roads and bridges. Taxes currently assessed on vehicle leases would be rerouted from the general treasury to transit programs in greater Minnesota and the suburbs.

"This is, in my view, going to be a very large tax on middle-class families," said Pederson, of St. Cloud "Now when those working families finally have relief from the gas prices, the Democrats' answer is just to simply to add another massive fuel tax increase and another sales tax increase without even looking at existing revenue."

He added that if transportation was a true priority, Democrats would divert a healthy chunk of an estimated $1 billion budget surplus toward new projects.

The state last passed a comprehensive transportation finance plan in 2008, which lawmakers boosted the gas tax by 8.5 cents. But as people turn to more fuel-efficient vehicles or transportation alternatives, the workhorse tax isn't keeping up.

Majority House Republicans haven't shut the door to a revenue increase, but they're starting out with a short-term plan that draws on the surplus and rearranges existing spending to provide a $750 million shot over four years.

The political stakes are high, and some Democrats in swing districts said voting for tax increases for transportation was worth the risk. Three freshmen senators who stood firm against a $2.1 billion tax increase enacted to balance the budget two years ago said they were full-square behind the transportation plan: Sens. Melissa Franzen of Edina, Vicki Jensen of Owatonna and Susan Kent of Woodbury.