Democrat transportation bill with $2.7 billion in tax increases is a ‘non-starter’

The Minnesota Senate on Thursday passed a Transportation Budget bill that contains $2.7 billion in tax increases, including tab fee and vehicle registration taxes, an increase to the metro area sales tax, and motor vehicle tax hikes. The tax increases are part of Democrats’ $10 billion tax increase agenda, which they are seeking despite the state holding a record $17.5 billion budget surplus.  

“Democrats want $2.7 billion in transportation tax increases even though we have a $18 billion surplus? Absolutely not,” said Senate Minority Leader Mark Johnson (R- East Grand Forks) “Raising taxes by $2.7 billion when Minnesotans are struggling with inflation is a non-starter. There was an opportunity to build a bipartisan transportation bill that funds roads and bridges, keeps our highways and transit systems safe, and helps every community, but we have been clear there is no need to raise taxes on hardworking Minnesotans.”   

MASSIVE TAX INCREASES DESPITE MASSIVE BUDGET SURPLUS 

Despite the largest surplus in state history, Democrats are proposing roughly $10 billion in tax increases spread across their budget bills. In the transportation bill, Democrats propose raising $2.7 billion in taxes: 

  • $901.81 million: 8% increase to the vehicle registration tax. The bill also slows the vehicle depreciation schedule, so people could pay up to 33% more every year 
  • $223 million: Increasing license tab fees. This is a $7.50 fee per transaction, so everybody will pay more 
  • $214.8 million: Increasing the motor vehicle sales tax 
  • $1.397 billion: Increasing the metro area sales tax. 83% of this revenue would be used for metro transit, while only 17% would be used for metro county roads. Collar suburbs will be shortchanged by this provision — they would pay the additional tax but receive very little funding back because most metro transit is in the core cities of Minneapolis and St. Paul. 
  • $59.90 million: Additional taxes and fees that go to the state of Minnesota 

WASTEFUL TRAIN PROJECTS 

The bill also provides $50 million for the controversial Northern Lights Express passenger train to Duluth. The value and effectiveness of passenger rail are highly contested: A Met Council report on Northstar rail found ridership is less than half of original projections and it requires the highest per-passenger subsidy and lowest fare recovery of any comparable rail line.  

On the heels of the Southwest Light Rail boondoggle, the bill spends another $50 million to extend the Blue Line Light Rail line from Target Field to Brooklyn Park. 

The bill provides $5.35 million this budget cycle and $4.88 million every subsequent year to operate a second Amtrak train from St. Paul to Chicago. 

QUESTIONABLE SPENDING 

Instead of adding law enforcement to crack down on crime on and around light rail lines, the bill provides funding to hire “transit ambassadors.” Transit ambassadors are trained to confront criminals by providing information about assistance programs like social services and safe housing. They are empowered to issue low-level administrative fines and little else. 

The previous Senate Republican majority made it a priority to fix “leakage” in the transportation budget – that is, illegal and unconstitutional MnDOT spending. One item Republicans corrected was the MnDOT Central Office, a bureaucratic office that was previously funded illegally using the Trunk Highway Fund. The Democrat transportation budget reverses course and pays for this office illegally using the Trunk Highway Fund, instead of the general fund as required by law. The appropriation is $6.37 million annually. Republicans successfully added a compromise amendment to partially fix this by paying for 50% of the building from the general fund. 

CLIMATE OVER ROADS AND BRIDGES 

The bill requires a greenhouse gas emissions impact statement for road projects that would prevent any highway expansion if ‘Vehicle Miles Traveled’ – a metric used to measure emissions – is predicted to increase in the report. In practice, this impact statement would halt virtually all highway expansion projects throughout Minnesota. 

The bill requires a Climate Action Plan for any and all Met Council long-term plans, which would drive up taxpayer costs on all future infrastructure or transit projects. 

REPUBLICAN AMENDMENTS TO IMPROVE THE BILL 

Senate Republicans offered a series of amendments to improve the bill: 

  • Delete all tax increases and instead fund the bill using general fund dollars. Raising taxes on Minnesotans in this environment is a non-starter 
  • Require a county referendum on the proposed metro area sales tax increase, so voters can have their voices heard 
  • Prohibit tax increases from being used to fund light rail projects, specifically the failed Southwest Light Rail line 
  • Redistribute the earmark for White Bear Township evenly among townships around the state to make the bill more fair 
  • Accelerate the full phase-in of the existing auto parts sales tax dedication to roads and bridges 

These amendments were rejected by Senate Democrats. 

Republicans found bipartisan support to:  

  • Amend the bill to rename the new overpass in Glenwood after Pope County Deputy Josh Owen, who was tragically killed while responding to a call on April 15 
  • Dedicate $56 million for Highway 65 and $30 million for Highway 10 
  • Allowing pregnant mothers to obtain a disabled placard and use disability parking if they have the same mobility issues as those currently using the disability parking due to an injury.