Special Post on Transportation Bill March 24, 2007

This is a special post on the House floor session on Saturday, March 24. The big item for this Saturday session is the Omnibus Transportation Finance Bill.

You can watch the floor session in the House video archives on-line.

Background: Minnesota suffers from a long backlog of transportation funding, especially roads. There is some useful background information on the issue from the Minnesota Transportation Alliance on-line.

Voters may recall voting for the constitutional amendment last fall that will dedicate the Motor Vehicle Sales Tax (MVST) to transportation purposes (60% roads, 40% transit). That funding by the end of a five-year phase-in will put another $300 million or so into transportation, compared to a need of $1.7 billion annually just for roads and bridges.

The bill: You can read the bill at the Legislature's web site. Look at the 3rd bill engrossment. This bill contains an increase in the gas tax of five cents per gallon this year and another five cents the year after. That would make our gas tax 30 cents per gallon by the end of two years. There is also a wheelage tax of $50 per car per year, an adjustment to license tab fees (removing the statutory cap on NEW vehicles), and a possible metrowide half-cent sales tax (if counties choose to approve it) that would support transit.

The math: According to the MN Department of Revenue, the average cost of the bill to a family of four (and that would be my family) of the gas tax would be $55 per vehicle per year. That's at 11,000 miles per year at 20 mpg. The wheelage tax could be $20 per vehicle per year. The tab fee adjustment is estimated to be about $50 per car, although there would be no increase for existing vehicles. The sales tax portion would cost a household with $75,000 in income another $100 a year. The total maximum bill for a family of four with two vehicles would therefore be $350. In my family, my car gets 30 mpg and my wife's gets 50 mpg and we have only one new car, but our household income is higher than $75,000, so my household probably would pay an additional $350 a year just like the estimate.

However, the Texas Transportation Institute reports that the average metro driver is incurring $722 in congestion costs or $1444 in total costs for a family of four with two vehicles. Congestion costs include lost productivity, waste of gas, etc.

So, in my household, we would come out ahead with this proposal. Through this bill, more funding for local roads would filter down to our cities and counties, thereby reducing pressure on these units of government to raise necessary funds from property taxes. (See discussion of Rep. Erhardt's evaluation of the Governor's proposal below on this point.) Indeed, the city councils of Shoreview and Circle Pines have sent me resolutions supporting comprehensive transportation funding this year for this reason.

The politics: The Governor's proposal is to use bonding for about $1.7 billion over the course of several years, and he has said he would veto any gas tax. The Senate has passed a much larger bill than what the House is considering that includes all of the items in the proposals and more.

The thing is that the House and Senate will eventually have to negotiate a single bill in conference committee, vote on it, and then the Governor can choose to sign or veto the bill. So this bill will go through many changes before the Governor sees it.

Rep. Erhardt (R-Edina) pointed out in debate today that the Governor's bonding proposal "will not work." Specifically, bonding for roads at the state level cannot be used for the municipal state-aid fund and county state-aid highway fund that supports local road construction and re-construction. These funds make up 38% of where the state's current transportation funds go. Bonding would only go to the trunk highway fund. That means more pressure on property taxes at the county and city level.

The votes: We saw 18 amendments to the bill. I voted for an amendment that would require that voters get to vote on the half-cent sales tax increase for transit. I support transit fully, but like my position on the proposed Vikings Stadium sales tax increase, I think you should get to vote. The amendment failed narrowly.

I have a problem with line 5.24 to line 5.27, which is the proposal to study using a mileage tax in place of a gas tax. This would cost $5 million in the next fiscal year. The reason I have a problem with this part is that the proposal would include looking at GPS technology that can be put in your car to help calculate how many miles you are travelling. This is kind of a slippery slope in my opinion. Rep. Emmer (R-Delano) offered an amendment about this and I supported it. The amendment failed.

I also voted against the Garafalo amendment that would prohibit toll roads. I don't think we should use tolls as the first method of funding new construction, but I think in one or two corridors in the state where the right-of-way is limited and where transit is unlikely it still could be a viable option, so a prohibition would be inappropriate. The amendment passed.

The final bill passed quite easily and I voted for it for the reasons mentioned above.