Showdown over the gas tax

Immediately after the I-35W bridge collapsed, Gov. Tim Pawlenty appeared to have an epiphany: An increase in the state’s gas tax, which he long opposed, was suddenly in play.

Talk of a special legislative session to address the Aug. 1 disaster arose, and Pawlenty spokesman Brian McClung told the Star Tribune in an Aug. 3 story, “We would expect that to include some of the governor’s ideas and some of the Legislature’s ideas, and under those circumstances, a gas tax could be included.”

Minnesota Public Radio and Associated Press reports published that same day noted that “Gov. Tim Pawlenty is willing to retreat from his firm opposition to a state gas tax increase in the wake of the Minneapolis bridge collapse and approve a transportation funding bill during a possible special session, a spokesman said.” McClung was quoted as saying, “We’re willing to consider all options, including a gas tax.”

The special session never happened. And the consideration of a state gas tax hike, something that was last passed in 1988, apparently fell off the governor’s “honey-do” list, since he hasn’t said much about it since. McClung did not respond to a request to be interviewed for this story, but plenty of others are talking.

“Rumor mill has it that it’s going to come real fast,” says state Rep. Neil Peterson, a Republican from Bloomington who supports the measure. “And a number of us will vote yes on a bill.”

In fact, lawmakers on the House side, at least, are set to unveil a transportation/transit bill today. The bill and the gas tax are likely to be the bellwether in a legislative session that many lawmakers are predicting will be frustrating, frugal and downright morose – such is the case when the state is broke. What seems certain is that both the Senate and House will introduce a transportation bill much like the one that was introduced last spring, which received support on both sides of the aisle but was vetoed by Pawlenty. An override failed.

This time out, however, two things have happened: The DFL gained one member in the Senate after the race for departing Republican Sen. Tom Neuville’s seat went to DFLer Kevin Dahle in a special election last month. That gives Democrats a two-thirds majority, 45 of the 67 seats, in the Senate – enough to override a veto. In the House, Dems hold 85 of the 134 seats; 90 is the magic number for an override.

And, of course, the bridge collapsed, changing the mood of lawmakers and constituents alike. In other words, things tilt toward a gas tax increase, adding anywhere from 5 to 7.5 cents on the current 20 cents a gallon.

“My shtick is that I have to maintain the health and welfare of my city and constituents,” says Peterson – adding that many lawmakers, particularly rural Republicans, are feeling heat on citizen, city and county levels to find money for infrastructure. “Chances are Pawlenty vetoes it, so the focus becomes can we get five representatives to come over to it. I’ve heard him say in meetings, ‘Go ahead, pass it, get the number you need.’ Is it a wink and a nod? I think he’s sincere in that he doesn’t want to increase the tax.”

But Peterson and others also note that holding the line on the gas tax and other taxes keeps Pawlenty on Sen. John McCain’s short list of vice presidential candidates: “He can keep his hands clean.”

Polls show a split
In October, the Star Tribune published a Minnesota Poll of 802 participants that found 50 percent opposed a gas tax increase, while 46 percent approved of one. In that same poll, 68 percent of Minnesotans polled approved of the way Pawlenty handled the bridge crisis, even though he hadn’t convened a special session when the poll was conducted in mid-September.
 
Then again, Minnesotans have been notoriously split on the gas tax. One Mason-Dixon poll released in May 2007 – before the bridge collapse – showed that 51 percent of 625 registered voters in the state favored a five-cents-a-gallon increase, while 45 percent opposed it. In 2003, a Minnesota Public Radio-Pioneer Press poll found those numbers just about exactly flipped. An MPR-Humphrey Institute Poll from less than two weeks ago shows a dead- even 49-49 percentage between opposition and advocates.

So polls are polls. Perhaps the best argument for an increase is a Growth and Justice study released this month called “20 Years Behind: Highway Spending & Revenues by Minnesota’s State Government 1986-2006.” The report by Matt Kane says that “over the last 20 years, state government spending for highways indeed has not kept pace with increases in inflation and vehicle miles traveled on Minnesota’s roads, leaving a cumulative gap of $13.89 billion over the full period compared to adjusted 1986 levels.”

The study also says that had Minnesota’s gas tax kept pace with inflation since it was raised to 20 cents a gallon in 1988, there would have been an extra $3.86 billion in highway spending the last 20 years. (The gas tax mainly goes to roads and bridges, not transit.)

On the other hand, the study also notes that the tax would have to now be 36 cents a gallon to equal revenues from 1986, a number similar to one cited by Transportation Commissioner Carol Molnau, and one that is certainly unpalatable to constituents and lawmakers alike.

“I did send out a questionnaire in my district, and the response was overwhelmingly no gas tax now,” says state Sen. Paul Koering, a Republican from Fort Ripley whose district includes Brainerd, adding that the economy has hit the area particularly hard. “I don’t feel comfortable raising the gas tax or piling on other taxes. I think psychologically or mentally, it’s too much.”

What about Peterson’s assertion that municipalities and counties, especially rural ones, are clamoring for infrastructure funds? “I am hearing from my counties that they would like me to vote for it,” Koering says. “But there’s such tremendous economic pressure on people right now, I have to say it’s not the right time.”

Other fees and taxes in the transportation bill
Republican Rep. Marty Seifert, the House minority leader from Marshall, is also worried about excessive taxation this session. He expressed particular concern about other things that were in the original bill vetoed by Pawlenty last session and are likely to be included again.

“It’s a tax bill, not a transportation bill,” Seifert said. “There’s a sales tax, a license tax a wheelage tax. I’m not going to support an increase and further burden low- and middle-income constituents.”

Seifert hints that he and other Republicans – maybe even the governor – would find a gas tax increase reasonable if DFLers would drop other aspects of the transportation bill. “I think really it’s going to be dependent on what the whole package looks like,” he said.

But Frank Hornstein, a DFL state rep from Minneapolis, says that’s just political volleying. “It’s a pretty modest bill right now,” says Hornstein, who has seen late drafts of the House bill. “That just shows a lack of seriousness from Republican leadership on this issue. The governor could make things happen on this, but there’s been no serious effort to address the issues in this bill.”

What Peterson, Koering, Seifert and Hornstein all agree on is that the fate of the bill and the gas tax all comes down to whether there’s enough will to fight a veto. “All the action is really in the House of Representatives on an override,” Hornstein says. “[Pawlenty’s] made that choice, and I think it’s a wrong one, to be a spectator in all of this.”

Seifert, for his part, says, “we’re confident of being able to sustain a veto,” but lawmakers will certainly take November’s upcoming elections into consideration. What wins in a politico’s mind: Being able to tell voters you held the line on taxes, or that you voted to fund public safety after an entire interstate bridge fell?

For Peterson, he thinks the argument is largely rhetorical, even among his fellow Republicans. “The main opposition will come from Jason Lewis, the radio guy,” Peterson says of KTLK-FM’s self-ordained “Mr. Right.” “It’s Governor Jason Lewis and his parliament of representatives from the Western suburbs. But I’m going to them and saying, ‘We’ve gotta do something. We’ve been negligent. We should have done it years ago.’ “

G.R. Anderson Jr., a former reporter and senior editor for City Pages, covers politics, the state Capitol and issues related to public safety.

Comments (7)

  1. Submitted by Duke Powell on 02/12/2008 - 05:21 pm.

    Your article mentions that polls show an app. 50-50 split in public opinion on an increase of the gas tax.
    Senator Murphy’s bill does a whole lot more than that. Each of the items listed are mentioned separately in the bill.

    Very large increase in tab fees

    Increase in E85 gas tax

    Increase in M85 gas tax

    Increase in Gas tax – State Vehicles using Diesel fuel are exempt

    Lower income individuals get a tax credit to help offset increase in gas tax

    Increase in Liquefied Petroleum Gas or Propane Gas Tax

    Increase in Liquefied natural gas tax

    Increase in Compressed natural gas tax

    Increase in all other special fuels not mentioned will be same as the gas tax

    Gas tax will be indexed to inflation on an annual basis

    Increase in vehicle rental taxes payable to the state

    Increase in the sales tax of ½ % in the Metro area

    Joint Powers Board arrangement for Metro Area that is heavily tilted toward Hennepin representation – Will grant monies to transportation, at least 50% to transit and 5% to bike or pedestrian paths

    Wheelage tax of $20 for any car sold in Metro Area

    Increase of sales tax and wheelage tax outside of metro area subject to voter approval

    Bill specifically adds metro sales tax onto Mpls lodging tax

    Large increase in surcharge to reinstate license if revoked, unless you had a public defender representing you, then it is much less

  2. Submitted by John N. Finn on 02/12/2008 - 11:13 am.

    It’s hard to imagine how people could drive more than they do already. But with more, wider, and improved roads, I’m sure we could manage to do so.

  3. Submitted by Matty Lang on 02/12/2008 - 11:43 am.

    G.R.:

    FYI–the state gas tax is 100% dedicated to roads and 0% dedicated to transit. This is a part of the state constitution. It’s a common tactic used by anti-public investment interests to imply that an increase in the state gas tax would go to fund transit–not one cent of it could by state law.

    The proposed metro sales tax is the much needed source of dedicated funding for our transit system. Of course, Seifert et al. will oppose this as well. They don’t seem to understand the importance of a well functioning metropolitan region to the entire state economy.

  4. Submitted by Matty Lang on 02/12/2008 - 04:27 pm.

    You are very welcome G.R. Thank you for writing. My issue is with the use of the word “mainly”. The story reads:

    “(The gas tax mainly goes to roads and bridges, not transit.)”

    I think it would more accurately communicate the situation if the word “mainly” was removed. The way it’s currently written implies that some money from the state gas tax goes to transit, which is false.

  5. Submitted by Bernice Vetsch on 02/12/2008 - 04:11 pm.

    And let’s not forget that the no-new-taxes philosophy is anti-government to the max: Its adherents believe the only thing government should do is protect property and protect persons from crime. The way to fulfill that “dream” is to starve government until it is small enough to be washed down the bathtub drain. See the web site for Americans for Tax Reform, http://www.atr.org, for more information, including the names of all legislators/governors throughout the country who have signed The Pledge. See also the information about Grover Norquist, ATR’s founder and now founder of a new organization called “Leave Us Alone,” which divides citizens into those who contribute and those who merely “take.” (As in destitute, homeless, mentally ill persons who “take” medical care and food from the rest of us. As in the public school system, the basic route to equal opportunity. As in anything we do as a society to help those among us who are in need.)

  6. Submitted by g.r. anderson jr. on 02/12/2008 - 03:51 pm.

    matty lang: as noted in the story. thanks for highlighting aqnd underscoring the point. thanks for reading.

  7. Submitted by John Olson on 02/13/2008 - 07:37 am.

    While I have not read the bill myself (as of yet), two of the items on Mr. Powell’s list would alone cause me to grab the veto pen:

    1) “Gas tax will be indexed to inflation on an annual basis.”

    Personally, I would support a modest gas tax increase but there is NO way I would support any tax RATE that automatically adjusts for inflation. Legislators and the Governor should be accountable for better or worse on any changes to tax law and not put it on autopilot. That’s irresponsible.

    Unless I am mistaken, I believe that income brackets for individual income taxes are indexed so that individuals or families with wages that are nominally increased for cost-of-living (COLA) each year don’t get caught in what is referred to as “bracket creep” where a nominal COLA moves a family into a higher tax bracket where the amount of the COLA and additional income gets swallowed by the inadvertent jump to another bracket.

    Indexing brackets in the case of the income tax is one thing; indexing the tax RATE itself is essentially taxation without representation or accountability no matter what tax it is.

    The other one that gets me is this one:

    “Large increase in surcharge to reinstate license if revoked, unless you had a public defender representing you, then it is much less.”

    Balderdash. You get your license revoked, you PAY to get it back regardless of who defended you. Driving is a privilege, not a right. Any one of us or our families could just as easily be maimed or killed by an intoxicated driver with a seven-figure income as an intoxicated driver with no income.

    The DFL legislature needs to put out a sensible and moderate package that can get greater bipartisan support instead of something that will no doubt be vetoed. The bill, as introduced is neither sensible nor moderate. If it were me, I wouldn’t even let the bill as currently written enter my office area–I’d veto it in the hallway and walk it back upstairs myself.

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