$200 Million More for Roads and Bridges Without Raising Gas Tax

What if we could have better roads and bridges without increasing the gas tax?  That’s the last thing DFL Gov. Tim Walz wants to see, after attempting to raise the gas tax on Minnesotans by 70 percent this year. Yet that’s exactly what’s happened, thanks to a creative bipartisan solution worked out before Walz took office.

The Minnesota Chamber of Commerce, one of the fiercest opponents of the gas tax hike, touted the new funding stream already flowing to our roadways without Walz’s 20 cent a gallon increase in a column by chamber president Doug Loon in the West Central Tribune.

Minnesotans today are reaping the benefits of bipartisan legislation passed two years ago. July 1 marked the full phase-in of the portions of transportation-related sales taxes dedicated to state roads and bridges. More than $200 million a year will go directly to transportation – without a tax increase.

…In 2017, Gov. Mark Dayton and the Legislature, in concert with many other stakeholders, dedicated 100% of the sales tax on rental vehicles and just over half of the sales tax on auto parts to transportation. The transfer was phased in, generating about $100 million in each 2017 and 2018. Now complete, the investment doubles to $200 million. That’s equal to a 7-cent gas tax increase.

But there’s even more revenue for roads where that comes from. Dedicating 100 percent of the auto parts sales tax to roads and bridges would significantly boost funding–all without raising taxes.

What would this mean for the state’s highway system? Full dedication of these two existing sales taxes would generate an additional $100 million, totaling $300 million per year, or the equivalent of a 10-cent gas tax. Most important, using 100% of these sales tax revenues for transportation would allow us to match a growing revenue with the year-over-year growth in construction costs. The sales tax revenues are projected to grow about 3 percent a year.

Of course, Gov. Walz has already signaled he plans to push ahead with a significant gas tax hike. But he would be wise to follow the bipartisan road map laid out by his predecessor and the 2017 state legislature.