Should state gas tax be increased?
The issue of raising the state’s gas tax is an almost annual debate at the Minnesota Legislature. The 2000 session is likely to be no different. But, whether the outcome will be any different than it has been for more than a decade is very much open to question. The state gas tax has remained at 20 cents a gallon since 1988.
But, the need to maintain and upgrade the highway system throughout the state, be it state, county, municipal roads, continues to grow, and the maintenance of infrastructure, such as roads, is very much a quality of life issue.
For example, the Minnesota Department of Transportation wants to upgrade the I-494/I-694 outer ring road of the Twin Cities to try and reduce congestion, but the cost, estimated more than $500 million, is way more than the state has as its disposal in funding now, and would take more than 20 years to complete given current funding sources.
Counties, too, are finding that the money they get for their county state aid highways (CSAH) from the state aid distribution falls a long way short of their documented needs. According MnDOT figures, county state aid highway money needs total $255 million for 2000, but under the state aid funding formula, the state’s 87 counties will get $155.4 million in 2000 to meet those identified needs.
Part of the problem for the counties, at least those in the metro area, is that the formula by which state aid monies are distributed remain skewed to greater Minnesota, even though some changes have been made in recent years. It is estimated that 50 percent of the revenues that go into the trust fund emanate from the Twin Cities area, but only 18 to 19 percent of the distribution comes back to the metro area.
Federal funding is also available for state and county highway projects, but the competition for those limited dollars is fierce. Indeed, Lakeville, one of the fastest-growing suburbs, has imposed a nine-month development moratorium because of current traffic congestion through that area. Lakeville wants to spend nearly $20 million in federal funds channeled through the Metropolitan Council to add lanes and rebuild bridges and interchanges along I-35 through the city. But, it does not see that money being allocated as the Metropolitan Council has shifted its emphasis to transit.
Which is why the Legislature needs to look seriously at how highways are funded, and transit as well for that matter. Both the Hiawatha light rail project in Minneapolis and the Northstar Corridor commuter rail system, along 80 miles of existing track from Minneapolis to St. Cloud through Anoka and Sherburne counties, will be coming to the 2000 Legislature for substantial dollars.
It is not as simple as raising the gas tax, which goes into the highway user distribution fund, which is dedicated exclusively for highway programs. The fund also includes money from the motor vehicle tax - the license tabs you pay for every year. According to MnDOT figures, the amount derived from the two sources each year is about the same. Of that money, the state gets 62 percent, counties 29 percent and cities with populations of more than 5,000, of which there were 125 in 1998, get 9 per cent. A small percentage of the total amount is taken off the top and set aside for administration, a disaster fund, state park roads fund and a research account.
It is anticipated that Gov. Jesse Ventura will seek additional highway funding from the Legislature in 2000, but in what form, an increase in the gas tax or some other source, has yet to be revealed. Any source other than the gas tax, however, calls into question how permanent the increase will be; it would be subject to the whim of future legislatures unless it was part of a dedicated trust fund. Highway officials remember too well when a portion of the sales tax on motor vehicle sales was at one time credited to the highway user fund back in the mid-1980s, but only for a few years.
There is a case to be made for increasing the gas tax, but, before any increase is approved, two things need to happen. First, there should not be no decrease in the motor vehicle tax as was contemplated last session and backed by Gov. Ventura. To reduce that tax while increasing the gas tax would be a contradiction and do little or nothing to add revenues to the highway user fund.
Second, the formula for distributing state aids funds to counties should be revamped to make sure the money is allocated much more equitably so that regions receive state aids based on the percentage revenues they generate for the highway user fund. That would clearly benefit the Twin Cities metro area.
