ST. PAUL — A Minnesota transportation committee on Thursday, April 8, advanced a plan to gradually raise the state's gas tax by 5-cents per gallon over the next four years and would tie increases to inflation after that.
The House Transportation Finance and Policy Committee on a 10-7 vote moved to the House Tax Committee a broader transportation spending proposal that would raise more than $350 million aimed at repairing roads and bridges in Minnesota. The plan would also adjust license tab fees, hike other vehicle sales taxes and post a luxury surcharge on high-dollar vehicles. An additional 0.5% transit fee increase would also go into effect in the Twin Cities under the plan.
Democrats and infrastructure advocates said the increases were needed to offset the cost of projects around the state. And labor unions, as well as construction firms, said the new investments would provide a boost to Minnesota businesses and workers.
Minnesota auto dealers, Republican lawmakers and others said the proposal would place a regressive tax on some who wouldn't be able to afford it and could curb new car purchases. GOP lawmakers said they'd oppose it and Senate Republicans, who control a majority in that chamber, vowed to block the provisions.
Rep. Frank Hornstein, D-Minneapolis, noted that the plan is scaled back from a proposed 20-cent gas tax he put forward in 2019. Twenty-two states and the District of Columbia have adopted similar gas taxes adjusted for inflation, per the National Conference of State Legislatures. Minnesota hasn't adjusted the state's sales tax on fuel since 2008.
"We are really in an infrastructure crisis. Our roads and bridges are deteriorating and this, to me, is really a step forward," Hornstein said. "Construction costs are increasing, roads are deteriorating. We can pay now, a little bit — this is a penny the first year, a penny the second year — we can pay that now or pay a lot more later."
Rep. John Petersburg, R-Waseca, said as the state forecasts a $1.6 billion budget forecast and $2.6 billion coming into the state from the federal American Rescue Plan, lawmakers should prioritize one-time funding for projects rather than additional taxes.
"I think that when we have surpluses and dollars coming from the federal government, those should be done for one-time expenditures and not necessarily long-term and I think that gives us an opportunity to do some of those one-time events," Petersburg said.
The Senate Transportation Committee Chair Scott Newman, R-Hutchinson, said the differences between the Senate and House versions of the plans were "very very stark," and he said GOP lawmakers would favor using more money collected through a tax on auto part sales for road and bridge repairs rather than a fuel tax increase.
Leaders of both committees along with legislative leaders and the governor will have to strike a compromise that can appease the Senate and the House for the bill to move forward.