Saturday, March 15, 2008

Dille on the Transportation Bill

Wright County: $2.7 million more per year.
Meeker County: $700,000 more per year.
McLeod County: $1.1 million more per year.

Urdahl voted no.

From Senator Dille:

I voted for the transportation bill that was vetoed by Gov. Tim Pawlenty and then overridden by the House of Representatives on a 91 to 44 vote and by the Senate on a 47 to 20 vote. I would like to take the opportunity to explain why I supported this legislation.

This bill will provide an additional $660 million per year for 10 years to help catch up on delayed maintenance and reinvestment in our transportation infrastructure. Some of this money will be used by cities, counties and townships and decrease the need to increase property taxes. For example, Wright County will receive an average of $2.7 million more per year, Meeker County will receive $700,000 more per year, and McLeod County will receive $1.1 million more per year.

The lack of action to improve roads and transit is costing us all real money as the cost of construction continues to increase and we lose out on potential federal funds. Investing in transportation will create jobs and boost economic activity. Also, we can make improvements to the safety of our roads and bridges and reduce fatalities and injuries.

The Minnesota Chamber of Commerce supported this bill and stated in their support letter that "Transportation is a critical issue for Minnesota businesses. Chamber members are users of the system -- they recognized that it is important for businesses to move freight and other goods efficiently and safely, and for employees to get to work in a timely and safe manner."

Over a 140 organizations and many individual citizens supported this bill including the Minnesota Truckers Association, Minnesota Farm Bureau, and Minnesota Farmers Union. This bill was supported by almost all of the farm commodity organizations including Minnesota Corn Producers, Minnesota Soybean Producers, Minnesota Wheat Producers, Minnesota Potato Producers, Minnesota Sugar Beet Producers, and Minnesota Pork Producers. In addition, this bill was supported by 21 environmental protection organizations and many local government organizations such as the Minnesota Association of Counties, Minnesota Association of Townships, and the League of Minnesota Cities. The transportation bill was opposed by two organizations, the Republican Party and the Taxpayer League, as well as, many individual citizens.

The final bill summary contains the following:
• 5 cent per gallon increase in gas tax.
• 3.5 cent per gallon surcharge on gas for servicing the trunk highway bond debt.
• $1.8 billion in trunk highway bonds over 10 years.
• Eliminating caps on license tab fees and changing the depreciation schedule.
• Dedicating sales tax on leased vehicles to greater Minnesota transit and local roads.
• Providing a $25 tax credit for low-income residents.
• Authorizing metropolitan area counties to impose a 0.25 percent sales tax for transit without a referendum.
• Authorizing counties in greater Minnesota to levy a sales tax of up to 0.50 percent for transportation purposes with a referendum.
• Increased authorization for MnDOT to spend trunk highway funds in FY08 and FY09 to reflect federal emergency funding related to the I-35W bridge project.
• $60M in general obligation bonds for local roads and bridges.

This increase in revenue may sound like a lot but it is only 1/3 as much as Governor Pawlenty's own Department of Transportation estimated is needed which is $1.7B more per year for 10 years. Also, if you calculate the increased revenue against the state and local units of governments' annual budgets, it comes to only a 1.5% annual increase in government spending.

In most years, budgets increase much more than that.

Many opponents claim this bill is the largest tax increase in state history, which isn't true. The fiscal analysts from the non-partisan Senate Counsel identifies the Minnesota Miracle of the early 1970s that reformed K-12 education funding as the largest tax increase in recent state history. State and local taxes went up 16 percent. Adjusted for inflation, this would be a $3 billion annual increase in 2008 dollars.

Minnesota currently ranks 30th among the 50 states in the amount they tax gas. When the 5 cents per gallon gas tax takes affect in October of this year and assuming no other states increase their gas tax, Minnesota will rank 20th among the 50 states.

Some argue we should fix our roads by selling bonds or, in other words, borrow the money instead of increasing our taxes. The bill that passed includes some bond sales, but the debt must be paid back so a surcharge was added of 3.5 cents per gallon of fuel to service this debt.

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