This week, both the House and Senate released their omnibus transportation funding proposals. While the bills differ significantly in their approach, both contain progress on key CGMC transportation priorities including city streets, Corridors of Commerce, and driver testing.
The House bill reignited the gas tax debate that has been dormant since a 20-cent increase proposed by Gov. Walz in 2019 failed to gain traction. This year’s House omnibus bill does not call for an immediate, drastic increase in the gas tax, but rather it indexes Minnesota’s gas tax to an inflationary measure tied to the costs of construction. The proposal would raise about $350 million in additional revenue over the next four years, over which time the gas tax would increase by about 5 cents from current levels. The House bill would also raise new revenues by altering the depreciation schedule used to determine a car owner’s annual tab renewal fees, slightly increasing the motor vehicle sales tax, and proposing a new tax on high-value vehicles.
Both the House and Senate would redirect some existing general funds to transportation. Currently, around half of the money the state collects attributable to the sale of auto repair parts is transferred to transportation uses—a result of the 2017 omnibus transportation budget. Both bills would capture a slightly larger share of that revenue in the coming years, but the additional revenue would be dedicated to a few specific purposes.
As of this writing, both bills are currently undergoing markup including amendments that may impact some of the specific dollar figures, but most cities with populations greater than 5,000 would see increases in their Municipal State Aid (MSA) allocations for city streets under both bills. Small cities receive a permanent, dedicated stream of funding from the additional allocation from the sales tax on auto parts in both bills as well. The House bill also makes an ongoing dedicated investment in Greater Minnesota Transit.
Both bills also make significant investments in the Corridors of Commerce program to fund safety and capacity projects across the state. There is still an ongoing discussion about whether the Legislature should modify the program’s project selection criteria. The Senate bill contains the addition of a “project readiness” criteria, while the House bill does not currently contain any tweaks.
We expect more funding data to become available over the next week as these bills head to the House and Senate floor, and we will share updates in future editions of the In Brief.
Finally, both bills take steps to alleviate the massive backlog of behind-the-wheel drivers tests in our state. The Senate’s approach enables third-party private testers to offer the service in addition to the Department of Driver and Vehicle Services in hopes of expanding availability. The House bill contains language that is still under some debate, but requires DVS to ensure that all areas of the state are better served.
If you have any questions about transportation-related issues, please contact CGMC transportation lobbyist Shane Zahrt at sazahrt@flaherty-hood.com.
