Minnesota House approves $7 billion plan to pay for roads

By Keith Goble, Land Line state legislative editor | 4/27/2015

The Minnesota House has endorsed a plan to spend nearly $7 billion during the next decade for transportation work without raising taxes. The plan differs from a Senate effort to raise $6 billion via new taxes.

Dubbed “The Road and Bridge Act of 2015,” the House voted by a nearly party-line vote of 73-59 in favor of a Republican-led initiative that relies on existing vehicle-related sales taxes now deposited into the state’s general fund and borrowing to provide $6.6 billion for the state’s transportation system. The bill, HF4, now moves to the Senate.

Sponsored by Rep. Tim Kelly, R-Red Wing, the bill includes $4 billion for state roads, $1.4 billion for county roads, and $583 million for municipal roads.

“We were able to prioritize roads and bridges in the fiscally responsible manner that Minnesotans wanted and expected,” Kelly said in a news release.

Critics of the plan say it amounts to smoke and mirrors budgeting. Specifically, Rep. Frank Hornstein, D-Minneapolis, criticized the effort to raid the state’s general fund to get road and bridge work done as relying on “shifts and gimmicks.”

“They insist on shifting money, looting the general fund, and taking money that could be used for education and kids to pay for our transportation system,” Hornstein stated.

The House package would increase funding to the Corridors of Commerce program, which benefits commercial routes in the state. The state’s smallest cities that aren’t eligible for state highway aid would also get a piece of the pie. In addition, about $230 million of the state’s budget surplus would be diverted from the general fund to transportation for local highways and transit projects.

Greater Minnesota bus services would also claim about $140 million and township roads and bridges would receive $60 million.

Rep. Peggy Bennett, R-Albert Lea, said the House plan provides “funding for roads and bridges in cities of all sizes, and addresses our transportation infrastructure needs statewide for years into the future.”

The Senate Democratic plan also addresses an estimated $1 billion annual funding gap to cover transportation maintenance for the next 20 years. The chamber’s majority party says their plan would increase revenue for roads, bridges and transit by about $800 million annually.

One main component of the plan would add a 6.5 percent wholesale tax on fuel, which would allow tax collections to increase with inflation. The state’s excise tax rate of 28.5 cents per gallon would remain unchanged.

The wholesale portion of the tax is estimated to raise more than $400 million for 2016. However, critics point out that the estimates are based on $3 per gallon fuel costs.

Higher vehicle registration fees are also included in the 10-year, $6 billion funding plan. Another part of the Senate Democrats’ plan would add a one-cent sales tax across the Minneapolis-St. Paul seven-county metro area to benefit mass transit. The tax is estimated to raise $251 million in 2016.

Gov. Mark Dayton has his own plan. The Democratic governor’s plan is similar to the Senate Democrats’ effort that adds a 16-cent-per-gallon wholesale tax to fuel purchases and other increases in transportation-related fees.

To view other legislative activities of interest for Minnesota, click here.

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