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Dayton goes big with transportation plan

MinnPost photo by Briana Bierschbach
Gov. Dayton's plan would raise about $6 billion for roads and bridges over the next decade via a 6.5 percent sales tax on gasoline at the wholesale level and an increase in fees for vehicle registration and license tabs.

On his 68th birthday, Gov. Mark Dayton asked the Minnesota Legislature for an expensive present: nearly $11 billion in new investments in roads, bridges and transit across the state over the next decade.

The aligning of the Democratic governor’s birthday and the rollout of his transportation funding plan on Monday was just a coincidence, but in many ways a transportation fix is the governor’s biggest want from legislators for his second term in office. He’s been talking about it since he hit the campaign trail for his 2014 re-election bid, when he signaled that he wanted to pass new revenues to pay for major transportation construction projects.

On Monday, he offered up the details: His plan would raise about $6 billion for roads and bridges over the next decade via a 6.5 percent sales tax on gasoline at the wholesale level and an increase in fees for vehicle registration and license tabs. The proposal would also borrow for local road and bridge projects to the tune of $2 billion as well as pump $2.8 billion into transit and bus projects in the seven county metro area through a half-cent sales tax increase in those counties.

“We’ll have transportation improvement projects going on all over Minnesota, putting over 100,000 more Minnesotans to work, and most importantly, laying the foundation for the future economic growth and social vitality of this state,” Dayton said Monday, surrounded by transportation officials in his cabinet and Lt. Gov. Tina Smith.

His plan is not far off from one introduced by a coalition of transportation funding advocates and Senate Democrats earlier this year, but it’s a “planet” apart — Dayton’s words — from a proposal released by Republicans in control of the state House.

Comparing transportation funding plans
Gov. Dayton’s transportation funding plan, announced Monday, is similar in scope to the plan proposed by the Senate DFL earlier this month. The plan put forward by the House GOP, meanwhile, calls for significantly less funding.
Gov. DaytonSenate DemocratsHouse Republicans
Amount of funding
  • $11B over 10 years
  • $800M in 2016
  • $1.1B annually starting in 2017
  • $750M over four years
Source of funding
  • New 6.5% wholesale gas tax ($4.4B/10 yrs)
  • Increased vehicle registration and license fees ($1.45B/10 yrs)
  • ½ ¢ metro-area sales tax increase for transit projects ($2.8B/10 yrs)
  • MnDOT efficiencies (15% of agency budget — total unspecified)
  • General fund for Greater MN transit and bike/pedestrian upgrades ($145M/10 yrs)
  • Trunk Highway bonds ($2B/10 yrs)
  • New 6.5% wholesale gas tax ($580M/yr)
  • Vehicle registration fee increase($125M/yr)
  • ¾¢ metro-area sales tax increase for transit projects ($251M/yr)
  • MnDOT efficiencies (Unspecified amount)
  • Bonding for local bridge/road repair($567M)
  • Motor vehicle lease tax increase for Greater MN transit ($32M/yr)
  • State budget surplus ($200M)
  • Trunk Highway Fund ($223M in 2016–17, $282M in 2018–19)
    Dedicates 90% of "unreserved balance" of the fund
  • MnDOT efficiences ($65M)

At the heart of the two sides’ disagreement is just how big Minnesota’s transportation problem really is.

Dayton regularly cites a $6 billion revenue gap over the next 10 years, a number he culled from a 2012 report of the Transportation Finance Advisory Committee, a group he assembled. If the gap isn’t filled, he said, road and bridge conditions will continue to deteriorate across the state — and costs will go up. Republicans who control the House say it’s not clear how big the problem is yet, but some more conservative estimates put it much lower than Dayton’s proposal.

“I think it’s irresponsible to create a longer term plan if we don’t understand and agree with what the need is,” said Rep. Tim Kelly, the Republican chairman of the House Transportation Policy and Finance Committee. “We hear $10 billion, we hear $6 billion, we hear $54 billion. That’s the issue.”

At the start of the session, Republicans released a short-term funding proposal that puts $750 million into roads and bridges over the next four years by using money from the state’s $1 billion budget surplus, along with some leftover cash in the Trunk Highway Fund. Funding for the plan also calls for the state to find 15 percent in savings and efficiencies in the Minnesota Department of Transportation (MnDOT) budget.

Kelly said he agrees there’s a need for investment in transportation — “I even agree with the governor, it is his birthday,” he said — but that the two sides should to come together on a transportation target before negotiations can really begin. That could happen this year, or it could happen next session, he said.

“We have a short term responsibility to create a budget within a matter of months,” he said. “I don’t think it’s any more apparent than today … that this is a very complex issue that we need time to go through the committee process and reach an agreement on.”

Rep. Tim Kelly
MinnPost photo by Briana Bierschbach
Rep. Tim Kelly: “I think it’s irresponsible to create a longer term plan if we don’t understand and agree with what the need is.”

Dayton also doesn’t have the full backing of the state’s major business organization, the Minnesota Chamber of Commerce, which was critical to passing the last major transportation funding package in 2008.

“We hoped to see a transportation proposal that reflects focused priorities and recognizes the fact that businesses and individuals just weathered a series of tax increases in 2013,” Bill Blazar, the chamber’s interim president, said in a statement. “First, we haven’t defined what it is we need to invest in strategically. We don't yet have a reliable and consistent projection of how much investment is needed in our transportation system over the next 10 years.”

Kelly wouldn’t close the door on raising new revenues to pay for transportation projects. Likewise, Dayton wouldn’t say how he would respond to removing the metro-area transit portion of his budget — a much-loathed area of policy for Republicans — and just pass a proposal for roads and bridges.

Metropolitan Council Chairman Adam Duininck
MinnPost photo by Briana Bierschbach
Metropolitan Council Chair Adam Duininck

But Dayton said he considered the needs of both Greater Minnesota and the metro area in creating his proposal, and he prefers a plan that addresses both. Under his plan, those in Greater Minnesota would see an increase in expenses of about $15 a month, largely due to the gas tax increase, while metro-area resident would see about $25 more a month in expenses, thanks to the increase in both gas and sales taxes. At the pump, consumers would likely see 16 cents per gallon added to to the price of gasoline.

What they would get for that money: 2,200 miles of repaired roadway and 330 bridges fixed across the state, according to MnDOT estimates. The metro-wide sales tax will also help create 20 new transit-ways, which would include rapid bus service to suburban communities, Metropolitan Council Chairman Adam Duininck said. Dayton’s plan also increases direct transportation funding for cities, counties and townships, giving local governments the flexibility to put money toward projects they deem worthy of repairs.

“It takes some political courage to tackle this problem and to enact this program, that’s why transportation funding is very difficult to obtain even when it’s urgently needed,” Dayton said. “You have to have the courage and the sense of responsibility to the state to propose changes that may be harmful to you politically but are absolutely essential to a better future for most of Minnesota.”

Comments (12)

  1. Submitted by Jim Million on 01/27/2015 - 10:35 am.

    A Wholesale VAT?

    Hmmm. Gov. Dayton’s coaches (business advisers, sorry) propose a gasoline sales tax at the wholesale level ?! So much for proper interpretations of taxing standards.

    A Value Added Tax is passed through all wholesale components of a product and collected at the end-user (retail) transaction. That’s the Sales Tax concept…and the prevailing practice we understand all too well.

    Is this wholesale VAT idea mainly a scheme to hide the tax from us, the simple people who supposedly don’t pay attention? Seems so. And why is the tax based on price (value) rather than use (gallon)? Do we damage our roads and bridges by how much we pay, or by how much we drive?

    Be honest and accountable by increasing the existing tax per gallon. The public understands and accepts that model: direct apportionment based on use. But, you see, the Dayton proposal would double collections, creating another nice windfall fund sometime “down the road,” when wholesale prices double.

    The Dayton coaches know the public will not accept a sales tax at the pump on top of the existing fuel tax. So…is this just obvious gamesmanship to bring the negotiations back to increasing the existing fuel tax? Is this just a lob shot over the net to see how opponents return service?

    Or is this just another example of Gov. Dayton serving with a broken racket?

  2. Submitted by Ray Schoch on 01/27/2015 - 11:30 am.

    Political courage

    I’ve pretty much been in Governor Dayton’s corner since he took office, but suggesting that “political courage” has been required of him to propose his transportation plan seems a bit of a stretch. He’s run his last campaign, and is serving his last term in elected office. He won’t be facing voters again. Offhand, I’d say that doesn’t require much in the way of political courage.

    For him, at least.

    DFLers may find that supporting Dayton’s opening proposal will require a certain amount of that political courage, depending upon where their particular districts lie. That said, it is, after all, Dayton’s opening proposal, and the GOP’s opening response. Let’s see what sort of negotiations take place, and what shape the final agreement might look like before jumping to too many conclusions.

  3. Submitted by Todd Hintz on 01/27/2015 - 12:01 pm.


    The 35W bridge collapsed in what, 2007, and Republicans are STILL saying we need to study the issue some more? How much more time do they need to run the numbers and get some scope on the issue? Seriously! Seven years isn’t enough time to pick up a phone and call MNDot? Even if the budget figures are sent via stage coach instead of email it shouldn’t take this long to get it together.

    Sorry, man, but it sounds like they’re being deliberately obtuse so they can kick the can down the road some more and avoid addressing the issue head on. It’s much more politically expedient to delay till the next legislature is in session so you don’t have to deal with the hot potato.

    Is this the Republican’s way of tacitly saying they don’t expect to be in office in two years?

    • Submitted by cory johnson on 01/27/2015 - 12:27 pm.

      Revisionist history

      So it was a critical shortage of tax revenue that led to the bridge collapse? Nevermind that the NTSB cited a design flaw as the most likely cause. That pesky fact doesn’t support the narrative. Unfortunately most voters believe your version.

    • Submitted by Mike Downing on 01/27/2015 - 04:40 pm.

      Ignorance is Bliss

      Todd must be very “blissful”!!

      The 35W bridge collapse was due to two things per the NTSB:
      1) A faulty original design, and a
      2) Wrong gusset plate installed during the original construction.

      It was NOT due to a lack of funding. To say otherwise is a flat out lie!

  4. Submitted by Sean Olsen on 01/27/2015 - 02:36 pm.

    Wholesale tax

    Is the wholesale tax covered by the constitutional amendment that requires it go to the highway funds? I’ve read the language in Dibble’s bill, and it makes it seem as if it’s not because it calls for transfers from the general fund to the highway distribution fund.

  5. Submitted by Dan Berg on 01/27/2015 - 02:38 pm.

    Make the tax transparent

    If we want to be fair and transparent we would fund all roads 100% via retail fuel and registration taxes. Registration being based on vehicle weight. No passenger car makes any meaningful impact on roads, buses and trucks however do and should pay for that damage. We should then apply the same system to transit with all funds gained from their form of user fees, fares.

    Would it cost more to move around? No, it wouldn’t. The costs would just be attached to the activity which would reduce the amount of unnecessary travel and encourage people to live efficiently. The idea that we can build our way out of congestion is ridiculous whether you think we can do so with cars, buses or trains. If we subsidize transportation we will get more of it. The mode is inconsequential.

  6. Submitted by Wayne Coppock on 01/27/2015 - 03:38 pm.

    I hate to break it to you, but roads suck far more money from the general fund than transit ever could, and cars most certainly do cause damage. Not to mention that roads just naturally degrade even if no one is using the, so there’s that maintinence to cover too.

    If you were expected to pay the actual cost of driving as up front user fees you’d start looking for a house on a transit line immediately. Not to mention the ridiculous idea of ‘free’ parking everywhere. You should have to pay for all parking in commercial areas via meters and in residential areas via a permit (that is not free). Parking costs a ton of money in terms of maintaining the extra road surface and taking land off tax rolls for storage of private property.

    • Submitted by Dan Berg on 01/28/2015 - 05:06 am.

      Not really the case…

      I understand roads use more general fund dollars than does transit, it also is used to transport basically all passengers goods and services while public transportations function is basically a rounding error. People that pay gas and license taxes do however represent a much higher percentage of the costs for of that system than do riders on public transportation for theirs. I understand that roads wear out even without use, so do all man made things including other methods of transportation, but passenger cars make zero meaningful impact on road life beyond what nature would cause. Buses and trucks cause roads to wear out much more quickly. City surface street parking already have a funding source, property taxes. The homes and businesses that front a section of the street are also obliged to pay for maintenance and repairs. Splitting that a bit with fuel and license taxes seems fair. Most other parking is something you have to pay for already. The fact there aren’t any free city lots I can think of near where I work in Minneapolis is why I pay $150 a month for a spot.

      If mass transit is more efficient than roads than 100% user fees should be the preferred method. The cost of driving would go up and transit would be the more attractive option. The reason this doesn’t happen is because mass transit is except in rare circumstances not more efficient or cost effective.

  7. Submitted by Joe Smithers on 01/27/2015 - 04:30 pm.

    go big or go home

    Or go big and go broke

  8. Submitted by Mark Ohm on 01/27/2015 - 04:32 pm.

    The Republican transportation plan is so small…

    that the Koch brothers will be spending more on the next election than the Republican transportation plan for our roads does over the next four years ($889 million vs. $750 million).

  9. Submitted by Jim Spensley on 01/27/2015 - 09:39 pm.

    Air Transportation?

    We seem to forget that billions are being spent at MSP to support as many or more connecting passengers as local passengers.

    Local travelers and visitors (tourists, conventioneers, sports fans, and business persons) pay most of the parking and baggae fees and more than half of the revenue MAC receives fron the airlines comes fron higher local fares.

    And on top of that economonic drag, FAA, TSA, Immigration, Customs, EPA spwnd big tax money — to help the hub and the airlines operate safely and securely. The EPA part is way less than need, according to scientific studies.

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