New fuel tax plan for roads faces first test Thursday

ST. PAUL, Minn. -- A plan that would boost spending on roads and bridges in Minnesota and funnel more dollars into mass transit faces its first key test Thursday, when the House Transportation Policy Committee debates and takes a vote.

The sweeping transportation bill, as drafted, would raise the sales tax in seven metro counties by three-fourths of a penny to fund bus rapid transit, bus lines and light rail projects. It would also enact a new "gross receipts tax" on fuel, in essence a five percent tax on fuel at the wholesale level.

That would equate to roughly 10 cents per gallon at the pump, according the Rep. Frank Hornstein, the Minneapolis Democrat who chairs the transportation committee and is the chief author of the bill.

But, unlike the current per gallon fuel tax, the wholesale tax would be based on the value of fuel sold in the state. So revenues would automatically increase as gasoline prices increase.

"We've heard so much on this committee about these big highway projects across Minnesota," Rep. Hornstein told fellow members of the transportation panel.

"This is our opportunity, collectively, as a body to say, 'Yes, we believe all of these projects that people have come to committee for are important, they're vital, they're urgent',"

The bill has strong backing from a coalition of organizations known as the Minnesota Transportation Alliance. The group's lobbyist, Margaret Donahoe, said the cost of inaction grows with each passing year.

"The public is very much aware of the deterioration of our roads and the problems we have with pot holes, and the cost to drivers is very real when they have to pay hundreds of dollars to have their cars fixed," Donahoe told legislators.

She said the results of transportation-related taxes, as opposed to some taxes collected by the state, are easy for the public to see. Donahoe cited as evidence some of the high profile projects that saw their schedules accelerated about the 2008 gas tax hike.

"We've seen major projects done that would not have been done, bridges – like the Hastings bridge and a number of other bridges getting done."

John Hausladen, the president of the Minnesota Trucking Association, said his organization supports an increase in the traditional per gallon fuel taxes but can't get behind the new style gross receipts tax. He asserted it's more reliable and easier for regulators and others to track.

Minnesotans currently pay 28.5 cents per gallon in state fuel taxes, added to the 18.4 cent per gallon federal tax.

Hornstein's bill would also have to clear the Ways and Means and Taxes committees to reach the House floor. And, in a year when all of the House members and Gov. Dayton are up for reelection, it may face an uphill climb.


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