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Walz budget includes ambitious transportation funding package — What does it mean for cities?

Gov. Walz has talked openly about his intention to propose a comprehensive transportation package that includes a gas tax increase, tab fee increase and other new revenues for transportation. His administration made good on those promises in Tuesday’s budget release by proposing a package that would result in a net increase in funding by more than $8.5 billion over the next 10 years from a variety of sources. The proposal would undo past statutory dedications of general fund revenues to transportation and replaces them with constitutionally dedicated funding sources.

Here are the major highlights, courtesy of MnDOT:

– Initiates a 20-cent gas tax increase (phased-in over two years) and indexing the gas tax to inflation (beginning in FY 2023) to raise approximately $6.5 billion over 10 years
– Increases the registration tax (increased tax rate from 1.25 percent to 1.5 percent and base tax fee from $10 to $45; change the depreciation schedule) to raise approximately $4 billion over 10 years
– Increases the motor vehicle sales tax from 6.5 percent to 6.875 percent to raise approximately $300 million for roads and bridges over 10 years, with additional funds raised for transit purposes
– Authorizes $2 billion in trunk highway bonds over eight years starting in 2022
– Proposes an increase to the Working Family Credit of $100 for each single or head of household recipient and $200 for each married filing jointly recipient to offset gas tax increases for low-income Minnesotans

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