MN Senate OKs $10.5 billion road bill

03/24/2007

DFLers led the charge for higher gas, sales and vehicle taxes to finance highway and transit projects. Pawlenty has pledged a veto.


By Conrad Defiebre,
Star Tribune
Last update: March 23, 2007


A tax-laden DFL bill designed to pump at least $10.5 billion into roads and transit in Minnesota over the next 10 years easily cleared the state Senate on Friday, the first effort in what promises to be a long spring of negotiations at the Capitol over transportation funding.

Step 2 in the dickering comes today, as the House debates its DFL leaders' $9.1 billion proposal, which, like its Senate counterpart, is fueled by higher gasoline taxes, vehicle fees and general sales taxes dedicated to transportation.

The final step in the first round is an expected veto from Republican Gov. Tim Pawlenty, who has outspokenly opposed the tax increases in both bills. On Friday, however, both chambers voted on partisan lines to reject Pawlenty's own tax-free transportation plan calling for $1.7 billion in borrowing over the next decade.

"The governor is addicted to debt," said Sen. Steve Murphy, DFL-Red Wing. "We decided to stick with pay-as-you-go."

Murphy acknowledged that Friday's vote of 42 to 24, with DFL Sens. Tom Bakk of Cook and Mary Olson of Bemidji joining the Republican opposition, showed too little support to override a veto, which would require 45 votes. But he voiced confidence that a revised bill raising perhaps $3 billion less will eventually pass muster.

On Friday, Republican senators branded the DFL's opening salvo "a tax grab,"a business killer" and "too big of a pig."

They said the bill would burden average Minnesotans with levies equal to 2 percent of their income.

But when Sen. Claire Robling, R-Jordan, said the tax load would make vacations unaffordable for most families, Sen. Satveer Chaudhary, DFL-Fridley, replied: "Our family can't take a vacation now, because we can't get out of town" on the Twin Cities' traffic-clogged freeways.

Billions in taxes

During a three-hour debate, DFLers voted down Republican amendments aimed mainly at a proposed half-cent general sales tax increase in the seven-county metro area, which would raise an estimated $2.4 billion for the region's roads and transit through 2017.

Party-line votes squelched GOP attempts to make the levy subject to a voter referendum or approval by all seven county boards, as well as a bid to spare exurban Carver and Scott counties the tax.

Murphy argued that similar sales taxes in other U.S. cities have built rail lines and freeway lanes that put the Twin Cities far behind them in economic development.

Murphy's bill, Senate File 1986, also features a 10-cent bump in Minnesota's current 20-cent-a-gallon gas tax to take effect July 1, raising $3.4 billion over 10 years.

On top of that, according to a Senate fiscal projection, automatic inflation and trunk highway debt service adjustments could gradually boost the tax to 44 cents a gallon by 2017, collecting another $2.3 billion. The bill's other major revenue sources are $2 billion in borrowing and $1.5 billion in additional registration fees on new vehicles.

The House bill, House File 946, slated for debate today, shares many of the same provisions. But it would raise the gas tax in nickel increments this year and next and leave it at 30 cents a gallon without further adjustments, raising $3.2 billion over a decade.

It also lacks a $457 million transfer of vehicle leasing taxes that is in both Murphy's and Pawlenty's proposals. And it would limit highway borrowing to $1 billion.

House sponsor Bernie Lieder, DFL-Crookston, predicted Friday that support for his bill will be "close to 100 percent in the House" today. He added that when it comes to transportation taxes, "the public attitude has really changed. Everybody says, 'What can we do?' The cost of not doing anything is horrible."