How should we fund transportation?

By Senator Scott Newman (R-Hutchinson)
Chair of the Senate Transportation Finance & Policy Committee

Gas tax increase? No.

One of the big topics we will wrestle with this session is how to fund Minnesota’s transportation infrastructure in the long-term. While we have made historic investments in road and bridge repair during my tenure as Transportation Committee chairman, we need a sustainable funding mechanism to ensure our vast network of transportation infrastructure is properly maintained and developed.

Shortly after his election, Governor-elect Tim Walz proposed a gas tax increase – which only 35% of Minnesotans support. I look forward to working with Governor-elect Walz and ask him to reconsider his proposal for the following reasons:

  • Adequate revenue currently exists without saddling Minnesotans with higher costs at the pump.
  • With the significant improvements to gas mileage, the 20th Century gas tax is out-of-date and has become an unreliable source for increased revenue.
  • Experts predict electric vehicles will make the internal combustion engine obsolete as soon as the next decade.

Possible funding alternatives

  • Dedicate a portion of the existing sales tax on auto parts to transportation. This is not a new proposal; in fact, this idea was given serious consideration during the last budget cycle. By dedicating a portion of the existing sales tax on auto parts and other vehicle-related services solely to transportation, we could ensure proper funding for our roads and bridges for decades to come without having to revisit the issue each budget cycle.
  • Give transportation its ‘fair share’ of overall tax revenue. Recognizing that everybody benefits from a safe and reliable transportation network, another possibility is to increase the share of current tax revenue for transportation. Right now, transportation has three principle funding sources: gas taxes, motor vehicle sales taxes, and license plate tab fees. Those are ‘user fees’, paid for by people who drive vehicles. If we took existing sales tax revenue and gave transportation its ‘fair share’ of that overall tax, all Minnesotans would be contributing to the transportation system. Currently, transportation receives between 0.5 and 0.7 percent of the tax revenue; if we increased that share to 1.5 percent, transportation would receive more than $600 million per year in additional funding – a significant increase in total dollars, but a relatively small share of current revenue.

The reality is additional funding for our roads and bridges will be necessary and it doesn’t make sense to tie that need to a funding source that will become unreliable.  I join most Minnesotans in vehemently opposing a gas tax increase and am hopeful the governor-elect will consider viable alternatives that do not raise taxes and fees on Minnesotans.

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