State gas tax, bus fares increase today

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Filling up your car, van or truck will drain your wallet a little more today. The state tax on gasoline, E-85 and diesel fuel went up $0.03 overnight, to 25.5 cents per gallon.

It's the biggest jump in the gas tax in 20 years and the last phase of an extra 5.5 cent per gallon gas tax that lawmakers approved in February.

Republican anti-gas tax ad
The state gas tax increased by three cents to 25.5 cents per gallon.
Photo courtesy of House Republicans

The latest increase could cost Minnesotans at least $100 million in the next year, based on existing taxes collected by the Minnesota Department of Revenue.

Anderson Trucking Services in St. Cloud, buys millions of gallons of fuel a month, according to operations manager Billy Woolsey. The privately held trucking company won't disclose its taxes, but a $0.03 gas tax increase would translate into nearly a million dollars of extra fuel costs a year.

But Woolsey's not complaining. He, like other members of the Minnesota Trucking Association, actually supported the tax earlier this year.

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"Well, no one likes to increase your costs, but three cents, it's dedicated," Woolsey said. "It's constitutionally dedicated, we know its going to our roads, bridges and infrastructure. If we don't invest our three cents or five cents or ten cents today, then it becomes ten cents or fifty cents or whatever tomorrow."

Woolsey also thinks the tax increase is a shrinking factor in the cost of doing business.

"I wish that you could say that fuel was stable enough that you could say that you're conscious of it," Woolsey said. "But it is so volatile. I mean it goes so up and down that three cents probably doesn't make as much of an impact as it would have a year ago."

Still, this year's higher gas tax will likely cost the typical Minnesota family at least $5 a month, depending on what, and how much, you drive.

And, if you're trying to avoid that pinch at the pump, don't expect relief from public transit.

Fares went up by $0.25 for most routes last night, and by $2 on the state's newest commuter route, from Forest Lake to downtown Minneapolis.

The Forest Lake ride will now cost $4.75 each way, matching the Northstar coach fare from Elk River. The standard rush hour fare elsewhere is now $2.25, and express rides are $3 each way.

The increase will cost a daily commuter about $120 a year.

The Met Council increased the overall fares earlier this year, citing higher fuel prices and other costs. Chairman Peter Bell said the council had to pass those along.

"We are running a deficit," Bell said. "We have a soft projection or a soft goal of having the rider pay about a third of the cost of operating our transit system. We are slipping slightly below that, and this far will recalibrate that closer to that 33 percent level."

The bigger fare increase, on the Forest Lake route, is part of a larger trend in public transit in Minnesota. The service from Forest Lake to Minneapolis started in January, in response to the collapse of the Interstate 35W bridge.

A federal grant paid to start the service to relieve traffic congestion and it's proven to be one of Metro Transit's most popular commuter routes. The Met Council voted last week to continue the service, even after the grant lapsed.

But as it has in other exurbs, such as Elk River and Big Lake, the Met Council is changing the way the service is paid for, making fares similar to a fee-for-service.

That's because a lot of the recent growth in commuter transit demand has been outside of what's called the Twin Cities transit taxing district, which only covers about half the seven-county metro area.

Inside the district, property taxes help subsidize the regular fare for bus and train service. But because riders from outside the district don't pay a property tax, they pay their share at the fare box instead.

But those fare hikes, and new gas taxes, may not be the last of the hikes.

The Legislature has already authorized another three cent per gallon hike by 2014, and the Met Council has said it may seek yet another fare increase next year if its financial outlook doesn't improve.