Transportation bill speeding through Legislature

See my update on the transportation bill! 

I’ve been tracking the transportation bill through the House (HF 2800) and Senate (SF 2521). This isn’t a comprehensive analysis, but here are the major revenue components which together would raise several hundred million dollars each year for our state’s transportation needs:

  • A 2 cent increase in the gas tax effective (roughly) the first day of the month after enactment and another 3 cent increase as of September 1, 2008.
  • A surcharge on the gas tax (capped at 3.5 cents) to recover debt service needed to repay trunk highway bonds.
  • Eliminates the cap on the motor vehicle registration tax, but accelerates the depreciation schedule. People will not see an increase in their tabs on their previously registered vehicles.
  • Provides a $25 refundable income tax credit for individuals and families in the state’s lowest income tax bracket (in 2009 income limits are estimated to be $32,720 of taxable income for married filing jointly and $22,390 for single filers).
  • Increases the fee on vehicle rentals and short-term leases from 3 to 5 percent of sales price. Gradually redirects the motor vehicle lease sales tax away from the General Fund. The funds are first used to pay for the low-income tax credit, then the remainder is distributed with 50% going to Greater Minnesota transit, 25% to metro area transit, 17.25% to county state-aid highway fund and 7.75% to municipal state-aid street fund.
  • Allows counties in the metropolitan transportation area (I think potentially 18 counties) to opt-in by resolution of the county board to a half-cent sales tax increase and an excise tax of $20 per vehicle (decreases to 0.25% after June 30, 2028). The funds would be used 50% for transit, 25% for trunk highways or local roads of regional significance and the remaining for any purpose (including up to 5% for pedestrian programs, bicycle programs and pathways). This provision will expire October 2, 2008 unless at least one county in the 7-county metro area imposes the tax.
  • Allows any county outside of the metropolitan transportation area to impose the half-cent sales tax and $20 motor vehicle excise tax if approved at a general election referendum. The funds raised would be dedicated exclusively to covering the costs of a specific transportation project or improvement and the tax would terminate oncde the project was completed. (The Senate amended the bill this morning to say “up to” a half-cent tax increase.)

The bill also originally indexed the gas tax to inflation beginning July 1, 2010, but this provision was removed as part of a compromise.

-Christina Wessel

About Christina Wessel

Christina served as the Minnesota Budget Project's deputy director until January 2014.
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