ST. PAUL, MN — Minnesotans could start paying more at the pump in the future.
That’s if Democratic Governor Tim Walz’s ask for a gas tax increase is approved in this year’s legislative session.
It’s still early on, and details of how much of an increase Minnesotans could see are unclear.
Gov. Walz has said, in a perfect world. he would like it to be a 10-cent per gallon increase. Walz added, for every penny increase, an additional $30 million would be generated for road and bridge repair.
If this goes through, it would be the first gas tax increase Minnesota has seen since 2012.
“It’s a non-starter. Especially with a $1.5 billion surplus,” said Sen. Justin Eichorn, R – Grand Rapids.
A gas tax, according to the state constitution, has to be used for road and bridge repair.
Governor Walz says he wants the increase, because, as he says, Minnesota has an $18 billion transportation need over the next 20 years.
“When you look at the numbers, there is nothing that provides that. It doesn’t matter if you zeroed out education, if you will, you’re still not going to be able to get there,” said Walz. “My responsibility is to get us to the next level of transportation.”
According to the U.S. Department of Energy, Minnesotans currently pay a 28.5 cent state tax on gas. That is just below the national average of 28.6 cents per gallon, meaning Minnesota ranks 25th in the country in state gas tax paid.
“If we increase that, say by 10 cents, we’re going to be in the top seven states, as far as our tax,” said Rep. Sandy Layman, R – Grand Rapids.
What Minnesotan’s pay is much higher than those in Alaska, who pay 9 cents per gallon. However, it is much lower than those in Pennsylvania, who pay 59 cents per gallon.
Governor Walz says he doesn’t want to see cities do what Duluth is trying to do, which is a half-percent sales tax increase to fund road repairs.
“It’s limited. It’s not as smart, it’s not as efficient,” said Walz.
In the same breath, Walz added not finding a solution to infrastructure needs throughout the state could greatly impact smaller communities.
“The situation that happened in Duluth, it’s going to happen in Mankato, then it’s going to happen in Winona. And the real sad part is, when it starts happening in smaller communities like St. James, they don’t have the tax base to do what Duluth did. And then we have a crumbling infrastructure, which drives business away, and drives opportunity away,” said Walz.
“On top of the state gas tax Minnesotan’s pay, we also pay an additional 18.5 cents in federal gas tax. That additional tax brings gas pumpers total tax bill to about 47 cents per gallon of gas. Meaning, if gas cost $2 per gallon, nearly 25% of the price is taxes.
“The federal government may be looking at increasing taxes, to pay for interstate improvements. We don’t need to be adding onto that here in Minnesota,” said Layman.
Governor Walz says if Republican’s don’t want it, provide an alternative solution.
“I’m open to your (Republicans) proposals. They may propose things that I disagree with, like toll roads, but I’ll listen to them,” said Walz.
Senate Republicans’ proposal is to make sure money currently being brought in through tabs and license fees is allocated correctly.
“Currently they’re going into the general fund, and politicians in St. Paul spend them everywhere else. I think we need to make sure, and we owe it to the citizens of Minnesota, to spend that money on what they think it should be spent on. And that’s roads and bridges,” said Eichorn.
In 1975, Minnesota’s gas tax was 9 cents per gallon. If that were adjusted for inflation, today. Minnesota would have a gas tax of about 42 cents per gallon.
Minnesota currently has a projected of $1.5 billion for the current biennium. There is also about $2 billion in the budget reserve, the state’s savings account, so to speak.
According to a study done by the Humphry School of Public Affairs in the Twin Cities, our gas tax currently makes up about 20% of the state’s transportation revenue.
It’s unclear when the proposal will come forward as a tax bill has not yet been crafted.