Minnesota House to debate transportation funding package that includes new taxes, fees
ST. PAUL, Minn. -- The Minnesota House on Tuesday will debate a transportation funding package that includes tax and fee increases to a create new, ongoing revenue sources for roads, bridges and transit.
Rep. Frank Hornstein, DFL-Minneapolis, chair of the House Transportation committee, said that the increases are critical because transportation needs are growing, but funding mechanisms have not been sufficient.
"The last time we had a substantial transportation bill was in 2008. It took the collapse of the 35W to move our legislature to do that very modest bill," Hornstein said. "We haven't really done anything significant in 15 years and I think our streets show that wear and tear."
The plan from House Democrats includes a new .75% sales tax increase in the Twin Cities seven-country metro to fund transit projects like bus systems and light rail, and a new 75-cent fee for most deliveries, whether that's an Amazon package or pizza ordered for dinner.
There's also a bump for motor vehicle sales taxes and fees to get car registration tabs and driver's licenses.
The bill earmarks some one-time money from the state's $17.5 billion surplus to match federal money authorized in the Infrastructure Investment and Jobs Act that Congress approved in November 2021. Most of the $7.4 billion Minnesota is set to get from that legislation needs state support to unlock the funds.
"That's just one-time money. We need this money going into the future, and so that is why in our proposal we raise new revenues so that we can have a safer transit system, so that we can fill these potholes and make our roads safer. We fund all modes of transportation all throughout the state," Hornstein said. "This is a very, very timely and needed bill that's a historic investment in our transportation infrastructure."
MnDOT officials testified at a House committee in January that current revenue streams aren't keeping pace with their projects and work, which has grown. They anticipate funding gaps upwards of $27 billion in the next two decades.
Rep. John Petersburg, R-Waseca, acknowledge MnDOT's concerns and agreed that increased funding for roads and bridges is "essential" to every part of the state. But he thinks the state legislature should leverage resources it already has, instead of bringing in new revenues through these proposed tax increases.
Minnesota has a dedicated funding through a gas tax and other motor vehicle fees for transportation, separate from the state's general fund that supports education and other programs.
"The surplus and general fund has to be part of the solution, but not tax increases," Petersburg said. "These tax increases that you're seeing right now are extremely cost-prohibitive."
Other retail and business groups, including Hospitality Minnesota, the Minnesota Chamber of Commerce, and the Minnesota Grocers Association, specifically oppose the retail delivery fee, calling it "a regressive fee that will negatively impact all Minnesotans and place an undue burden on businesses."
But 75-cent extra charge on packages delivered to Minnesotans' homes is not included in the Senate DFL transportation budget proposal -- a sign it lacks the support to pass in that chamber.
Both the House and Senate will have to come to agreement on all budget bills before session's end.