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GOP transportation proposal leaves plenty of room for tax cuts

The $7 billion plan uses only $228 million from the state’s $1.9 billion surplus.

House Transportation Finance Chairman Tim Kelly discussed the Republican plan on Monday.
MinnPost photo by Briana Bierschbach

If there was any question that legislative Republicans are serious about “giving back” at least some of the state budget surplus, it was answered with the transportation-funding proposal they unveiled Monday.

Republican leaders offered a plan that spends $7 billion over ten years but does not raise any kind of tax and, more significantly, uses only $228 million from the state’s current $1.9 billion budget surplus. 

That leaves plenty of room and money for House Republicans to offer tax cuts when they issue their broad budget plan today. And it underscores the Republican argument that the state can spend more on certain priorities without raising taxes.

To fund transportation, Republicans would create a new $3 billion account consisting of existing transportation-related revenue like taxes on auto parts, rental vehicles, and car leasing. The plan also calls for approximately $2.25 billion to be generated in bonding and $1.2 billion from an unspecified “realigning” of existing MnDOT resources. And then, $228 million from the general fund surplus would be used for a “one-time infusion.”

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The governor’s office has already labeled the proposal “shift and gift,” meaning Republicans have decided to fund new transportation priorities with existing taxes that now pay for other state spending.

But DFLers seem pleased that Republicans have come up with a plan at all, especially one that approaches Gov. Dayton’s more expansive proposal.

The governor’s and Senate DFL plan is more transparent and more expensive — an $11 billion, ten year plan that’s paid for with a gas tax increase of 16 cents per gallon, a higher metro area sales tax, and higher license tab fees.

A compromise on transportation could require Republicans to cross the no-tax line that is the cornerstone of their plan.

Still, this proposal accomplishes what Republicans say the state should be doing in this time of budget surpluses — prioritizing spending to not only avoid new taxes but send some of that extra revenue back to taxpayers.