State lawmakers — they’re just like us! Which is to say: completely fed up with potholes on the streets of Minnesota’s capital city.
Last week, three members of the Minnesota House went out for ice cream on St. Paul’s Grand Avenue. Driving home, Dassel Republican Dawn Gillman popped a tire — and her companion on the trip blew a fuse.
“Fix [the] damn roads,” Rep. Mary Franson, R-Alexandra, tweeted at St. Paul’s mayor, Melvin Carter. She added: “The roads look like they belong in a war torn country.”
A day-and-a-half later, Carter responded with an apology — and a plea.
“We really do need to fix these darn roads,” he replied to Franson. “Luckily, we have a #SalesTax proposal at the legislature right now to do exactly that! Can we count on you to support our bill?”
I’m sorry to hear about this; we really do need to fix these darn roads!
Luckily, we have a #SalesTax proposal at the legislature right now to do exactly that! Can we count on you to support our bill & help solve this problem for others in the future? Thx! #mnleg https://t.co/0cNajaqfzu
— Melvin Carter (@melvincarter3) March 10, 2023
What St. Paul wants & why
Before Minnesota cities can ask voters for permission to raise local sales taxes, they need the Legislature’s permission. This year, the League of Minnesota Cities’ Gary Carlson said a “record” number of local governments — 31 cities and 5 counties — have brought sales tax hikes to the Legislature.
The capital city’s request is arguably the biggest. St. Paul’s leaders have proposed a 1% increase to the sales tax, one of only six proposals in the Legislature for an increase of one cent or greater. No other municipality’s proposal would generate as much revenue as St. Paul’s: $984 million over 20 years.
Though one-quarter of the funds would pay for park improvements, most of the sales tax revenue ($738 million) would pay for repairs to St. Paul’s arterial streets. Carter argues that — in part because previous city leaders resisted tax increases over the last decade — St. Paul hasn’t generated enough funding to replace roads in a timely fashion.
“Everybody hates our streets and knows how much they need significant investment,” Carter said during a recent virtual roundtable discussion with the Greater St. Paul Chamber of Commerce. “Everybody loves our parks and doesn’t realize the extent to which they need significant investment to keep us from falling into the type of place that we’re talking about [with] our streets right now.”
What critics think of the proposal
But even if St. Paul gets legislative approval, are the city’s voters too tapped out to vote for a sales tax hike? Inflation has already squeezed many households — plus, in December, the City Council approved Carter’s call for a 15% property tax hike (though about half of that increase came from the city shifting certain fees to property owners’ tax bills).
The lone vote on the City Council against pursuing a sales tax hike was Jane Prince, who argued city leaders were rushing the idea, blindsiding the business community. She said St. Paul ought to focus on lobbying for more ongoing funding through the Local Government Aid formula — the state’s primary means of sharing revenue with municipalities.
“I’m not opposed to a sales tax out of hand,” Prince said, but “we could be providing some meaningful property tax relief if we can get Local Government Aid in a better place for the future.”
St. Paul likely is in line for a multi-million-dollar boost to its annual Local Government Aid allocation this year. However, Carter argues that future Legislatures could also cut this funding source at their discretion; a local sales tax would generate revenues throughout its lifespan.
Is there any alternative to a sales tax?
State lawmakers’ preferences about how to fund road projects might also affect St. Paul’s proposal, Carlson said.
In exchange for permission to increase sales taxes locally, Minnesota law asks cities to specify a capital project that the revenues will fund — like a park, a trail or a building — and convince the Legislature that the project will have benefits beyond the city’s borders. Local street improvements aren’t listed as an example of a “regionally significant” project.
In recent years, leaders of some cities — like Waite Park, which borders St. Cloud — have struggled to convince lawmakers to advance local sales taxes that would pay for road improvements. But other, bigger cities — like Rochester — have had no such trouble getting taxes through.
Carlson noted the Legislature went on record in 2019 as preferring that the costs of road repairs get passed directly to vehicle users through the gas tax or the motor vehicle sales tax. It’s a much more efficient means of collecting the revenue, said Martha Njolomole, an economist with the conservative Center for the American Experiment think tank.
“User fees are a better way to collect revenues for things like infrastructure. They’re a direct connection between users and the service that they use — so they’re very efficient, they’re not distortionary,” said Njolomole, who also participated in that St. Paul chamber’s roundtable in late February.
Though Minnesota exempts groceries, clothing and drugs, sales taxes are also inherently regressive; lower-income people have a harder time covering the additional cost of a higher sales tax — a downside that Carter acknowledged: “We don’t really love this structure.”
But there’s no more viable alternative than a sales tax, he argued.
“We are going to have to invest in our streets one way or another,” Carter said. “If it doesn’t come from sales taxes, it will have to come from somewhere else … The ‘somewhere else’ we have access to is property taxes. We should consider sales tax as property tax relief for St. Paul property owners and business leaders.”
This is public policy in action. A problem exists, lawmakers identify a means to solve that problem, and the voters make the determination on how we proceed. I know people on this message board will complain about HiGhEr TaXeS, but kudos to Mayor Carter for leaning into it!
Maybe the problem is related to the loss of retails sales in the first place. Downtown St Paul is a ghost town. Maybe fixing the things that caused that would help the situation out. Raising taxes on a shrinking tax base is a recipe for disaster.
The problem is the base layer on most of the roads needs repair. Most main roads haven’t been brought down to the base in 50 years when the sanitary and storm sewers were separated. The mill and overlay is just a patch, and complete overhall is needed on too many main streets. That costs a lot of money, more than the city can afford now and still wont be paid for with that sales tax increase. If there was money, people would complain that Randolph and Hamline gets fixed while Payne and Maryland does not.
In the central cities, there are a great many road users (Rep. Mary Franson of Alexandria, for one) driving around in a place where they do not own property or pay property taxes. So it does seem fair to set a tax that will draw from everyone passing through. And something definitely needs to be done about the streets in St. Paul.
That argument used to hold. And people do come into the cities for events; however as other areas grow, they too can claim people from other areas drive in their towns/suburbs for shopping, travel, leisure, etc.. More people have cars and drive various places.
I’m not sure what your point is. I did not claim that St. Paul is entirely unique in this regard, and other cities are certainly welcome to try dedicating sales tax proceeds to road repairs as well. In fact, the article mentions that Rochester has done so.
“the Legislature went on record in 2019 as preferring that the costs of road repairs get passed directly to vehicle users through the gas tax or the motor vehicle sales tax”
Generally it would seem to make sense to tie the costs of maintaining the roads to the users of the roads. However, the state collects the gas tax & motor vehicle sales tax, whereas St Paul pays for maintaining St Paul roads. So either the state needs to take over road maintenance, or St Paul needs a funding source.
So, just to be clear, this is another subsidy for motor vehicles.
If the tax is on fuel, or vehicles, the owners and operators would be pulling their own weight. But when it comes to local streets and roads, that’s not the case, excepting for the rare state aid roads. It’s local taxpayers footing the bill, and that’s primarily the property tax.
If vehicle owners and operators paid for local roads, those who don’t own vehicles would still pay their share, because the delivery vehicles they rely on would pass on the cost of road maintenance.
What’s wrong with this picture?
State government is sitting on billions in surplus revenue and Walz and legislators are scrambling for ways to spend it – including several that would create ongoing revenue needs, inflating future needs for more revenue.
On the other hand, increasing numbers of local government units across the state are scratching for additional money (many for infrastructure needs and upkeep). A “record” number are seeking approval to ask voter authority for local sales tax increases; a considerable number of cities and counties already have increased local property tax rates.
State government has too much money, local governments not enough. Those in state government tinker with short-term cosmetic “tax cuts” to obscure spending increases. (Also quietly moving to increase several fees behind the scenes). Local governments don’t have enough and have – or want to — increase taxes.
Too much money in one area, not enough in another. What does common sense suggest?
Totally agree. The huge tax surplus the state of Minnesota has is disgusting. And I am a committed Democratic Voter. This tax money should go to fix the roads in Minnesota. no more taxes. Use what we already have to take care of the terrible problem of the roads.
A few weeks ago there was an interview with Mayor Carter published. In that article he laid out much spending for initiatives regarding inequality. The initiatives while noble and well intended are beyond the purview of city government and would be best pursued at the state or federal level.
St Paul has become the city where nothing works, right now Mayor Carter should be focused on restoring basic services.
1st step would be to drastically cut the staff in the Mayor’s office!
It should be trivially easy for St. Paul to convince these out state legislators that the local sales tax for improved St. Paul roads will indeed have benefits beyond the city’s borders. Namely, THEY will benefit. It will get them to and from the State Capitol and surrounding Saint Paul businesses safely.
And yet, no one will be surprised to see (R)s Gillian, Franson and Swede vote against allowing Carter’s sales tax hike request.
“[I]n part because previous city leaders resisted tax increases over the last decade — St. Paul hasn’t generated enough funding to replace roads in a timely fashion.” I recall St. Paul mayors over many years basking in the glory of not raising taxes. And getting reelected for keeping taxes low. Now the chickens have come home to roost and St. Paul taxpayers have to pay more. Other Metro cities have kept taxes and revenues in line with needs and St. Paul needs to step up. Now.
This is not a new problem. St. Paul streets have been horrible for years. Do not look to other Minnesota taxpayers to bail St. Paul taxpayers out of foolish choices.
The proposal is for a St Paul sales tax increase, not a statewide one. This more narrowly targets people buying things in St Paul, which seems a reasonable proxy for road users in St Paul.
For example, I don’t live in St Paul, but do go there from time to time, both spending money locally & using the roads. It seems reasonable that I need to contribute a bit to maintaining those roads.
Increase the city tax base.Cut some of the new positions that were created .Asking taxpayers to pay more taxes but spending more for pet projects.
Get rid of the Ambassadors downtown,they are useless.
Como park should charge for parking.
State Capitol keep buying buildings nearby for parking ,ban new parking near capitol ,even park land was paved for parking there.
Sell all city owned parking garages and or build housings above them.
Increase density esp downtown,most new buildings are only 4-5 floors.The last housing hi-rise was built in 1989 ,the last office tower built was over 20yrs .
Mpls have 15 libraries , St Paul have 13 ,there are 100000+ more people in Mpls .
As I understand the proposal, sales tax revenues would be used only for the maintenance of only a portion of the city’s streets. If my street isn’t among them, I suspect it will be funded with assessments on my property. If that is the case, I will pay twice, once via sales tax with no direct benefit to me, then via assessment, based in theory on the existence of a direct benefit to my property.
I’d prefer we simply suck it up and assess benefitting properties. It’s been more than 30 years since the last major reconstruction in my part of town and the streets have almost completely failed at this point. There is no remedy short of replacement.