DFL plan could spike gas prices in Minnesota, raise other fees

Published 9:43 am Wednesday, March 6, 2013

ST. PAUL — Minnesota drivers could pay nearly 10 cents extra per gallon at the pump under a package of tax hikes House Democrats proposed Tuesday to help pay for roads, bridges and transit projects across the state.

Besides a 5-cent gasoline tax increase and 4.5-cent fuel charge hike, the top Democrats on two House transportation panels proposed increasing license tab fees, expanding taxes to more auto parts and services and increasing the sales tax for transportation in the Twin Cities metro area.

Minnesota’s current gas tax is 28.5 cents a gallon. It was last increased in 2008, when the Legislature overrode then-Gov. Tim Pawlenty’s veto of a phased in, 8.5 cents a gallon increase.

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“That was about a third of the money we needed, but it was what we could get at the time,” said Rep. Ron Erhardt of Edina, chairman of the House Transportation Policy Committee.

In 2008, Erhardt — then a Republican — joined Democrats to override Pawlenty’s veto. Erhardt later lost his House seat to a fellow Republican, but is back this year as a Democrat.

“That money is about gone, and we have to step up and move forward,” Erhardt said.

But Erhardt and Rep. Frank Hornstein, the Minneapolis DFLer who chairs the Transportation Finance Committee, once again face a skeptical governor. Gov. Mark Dayton, a fellow Democrat, reaffirmed an earlier statement that he’s reluctant to support a gas tax increase. Earlier, Dayton said he thinks an increase lacks public support; on Tuesday, he said it wouldn’t raise enough money to make a big difference in transportation funding.

“My concern is, unless we find a new way to finance major transportation projects, we’re going to be continually falling farther behind,” Dayton said.

But in shooting to raise the gas tax, Democrats could find GOP allies. Rep. Michael Beard, R-Shakopee, said he supports a gas tax increase and would work to keep the debate over it separate from his party’s overall anti-tax message at the Capitol.

“This is transportation. This has always been different because it’s the infrastructure we all run on,” said Beard, lead Republican on the Transportation Finance panel. He said the gas tax should be viewed as a user fee, though he said he diverges from Democrats who want to use some of the money raised to fund transit projects.

Beard said he’d also consider supporting the fuel surcharge increase, a proposed 4.5-cent hike in the current 2.5 percent charge. The money generated is used to pay off construction bonds on major transportation projects.

But Beard said Republicans are likely to uniformly oppose a license tab fee increase. “Those are already so high,” he said. The amount paid is based on the value of the vehicle, and transportation funding advocates said the proposed increase would be a minimum of $10 and likely higher for more valuable vehicles.

Supporters of greater transportation funding have a long list of projects. Some of the biggest include expanding Highway 14 in southern Minnesota to four lanes between Owatonna and Waseca, at $200 million; adding a third lane to Interstate 94 between Rogers and Monticello, at $100 million; Highway 212 improvements, at $80 million; and the planned light rail line from Minneapolis to its southwestern suburbs, at $1.2 billion. Money for some of those projects, particularly light rail, is likely to come from the federal government.

Hornstein is also considering a provision that would allow local governments to band together and propose local sales tax increases to pay for projects of regional significance. Erhardt and Hornstein said they expect to have a finalized transportation bill together by mid-April; a companion bill in the works in the Senate is also likely to include some transportation tax increases, including a gas tax hike.

Erhardt said a five-cent gas tax increase would generate about $150 million a year for transportation projects, and cost the average driver an additional $30 a year. He wasn’t able to say how much it would cost that same driver if all the tax and fee proposals were to be enacted.