Gas tax proposal fizzles in Senate committee (updated)

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A renewed play by Senate Transportation Committee Chair Scott Dibble to increase Minnesota’s gas tax ran into another roadblock on Wednesday in the Senate Taxes Committee.

On Tuesday Dibble released online a revised proposal to increase Minnesota’s gas tax by 7.5 cents per gallon to pay for roads and bridges. The move was the latest in a number of exchanges this session that have seen transportation funding proposals advanced by DFLers in the Legislature only to stall out in the face of opposition from Gov. Mark Dayton.

State legislators have been trying to find a way to balance transportation funding so that road and bridge projects in greater Minnesota receive increased funding to complement a proposed increase in the metro area sales tax to pay for metro transit projects. But while Dayton supports the metro counties’ sales tax increase, he strongly opposes the gas tax increase.

It was against this backdrop that Dibble put forward the latest version of his gas tax increase in the Taxes Committee on Wednesday. Dibble also prepared a scaled-down version of his proposal that would have increased the gas tax by 2.5 cents in both 2014-2015 and 2016-2017. DFLers briefly recessed after Dibble offered the 2.5 percent proposal. When they returned, Sen. Lyle Koenen moved to pass a lights-on version of the bill with no increased funding. That motion passed.

‘Lost opportunity’

Dibble said he was disappointed by the outcome, noting that the prospects for passing a transportation bill in next year’s election-year environment are poor. He also noted that transportation funding could be left further in doubt if the DFL House majority and Dayton are defeated in the 2014 election.

“I think [the failure to pass a bill] is a lost opportunity to do a significant investment,” Dibble said. “We have no idea what the future will bring. The window may well close, and we might not get back to this conversation for 10 or more years.”

The case for greater outstate transportation funding was laid out prior to the legislative session in the report of an advisory committee assembled by Dayton. That report estimated the cost of the state’s unmet transportation needs looking out to 2020 at $21 billion. Dayton’s advisory committee recommended gas tax increases to make up $15 billion of the shortfall.

The increased funding for transit in the seven-county metro area was included in Dayton’s proposed budget back in January in the form of a sales tax. Dibble and his House counterpart, Rep. Frank Hornstein, DFL-Minneapolis, came to the conclusion that the metro sales tax would fail to win enough votes unless the transportation bill also contained funding for roads and bridges in greater Minnesota. The gas tax, which is often regarded as the workhorse of the state’s transportation funding system, was frequently mentioned as the likeliest funding mechanism for adding greater Minnesota to the mix.

Earlier plan also shot down

Dibble and Hornstein came back to St. Paul from the Easter/Passover break planning to introduce a substantial funding bill. But in early April, Dayton stated his opposition to the gas tax in a way that Dibble and Hornstein took to be unequivocal. In response, Hornstein passed a lights-on bill to the House floor. Dibble wound up tabling his own lights-on bill because it lacked the support to pass in the Senate Transportation Committee.

A week later, Dibble introduced a new proposal that actually reduced the gas tax, but created in its place a 5.5 percent gross receipts tax on gasoline sales at the wholesale level. The net result would have been $225 million annually in new funding. That proposal, however, drew criticism from the trucking industry, which contended it would significantly increase the cost of gasoline. The sales tax on wholesale gas didn’t fly, which led Dibble to give the gas tax another try as a last-ditch effort. In the wake of the defeat, he said the matter now rests in the hands of Dayton and legislative leaders.

“If the governor is willing to put a political push behind some of these revenue ideas with House leadership [and] Senate leadership agreeing to that — this has to happen at the highest levels in what we call the global deals made between the leaders at the end of session. I don’t think we have any ability anymore through this legislative committee and floor debate process of accomplishing new investments in transportation.”

After the Senate Taxes meeting, Dayton suggested at a press conference that funding benefiting the metro area alone would have statewide benefits. He said the idea of a geographically balanced transportation bill that gives something to both the metro and greater Minnesota is “old-fashioned.”

“In this case, with the metro sales tax, the metro counties are willing to tax themselves in order to improve the flow of transportation and people around the area,” Dayton said. “That makes it a more attractive place for businesses to locate or expand. New businesses come in and that adds jobs. It adds to the LGA and school aids and the other things that greater Minnesota benefits from because of the vitality of the metropolitan area.”

But that begs the question of whether such a metro-first bill could attract enough support from greater Minnesota legislators to pass in the House and Senate. A transportation funding bill that is tilted toward the metro area is a concern for greater Minnesota, according to transportation lobbyist and former legislator Bill Schreiber, because rural interests fear that their metro counterparts would not buy into future transportation proposals for roads and bridges.

“The fear of greater Minnesota and some suburban legislators that have a high interest in highways is that if the transit needs are satisfied, it removes a lot of folks who are core cities legislators who just are interested in transit and not in highways,” Schreiber said.

He added that the greater Minnesota funding issue is a pressing matter for legislators who are hoping to get construction projects started. But Schreiber didn’t discount the possibility that transportation could re-emerge as the larger budget deals get finalized.

“The fat lady hasn’t even gone to the back of the stage yet,” he said.