Minnesota House takes up bill with disputed gas tax hike

Rep. Frank Hornstein (DFL) voices his support for an amendment
DFL Rep. Frank Hornstein during a House Transportation Finance Committee meeting inside the State Office Building in St. Paul in March 2018.
Evan Frost | MPR News 2018

Minnesota House Democrats began confronting one of their deepest divisions with Republicans when they took up a $7.2 billion transportation funding package Friday that includes Gov. Tim Walz's proposal to raise the state gasoline tax by 20 cents per gallon to pay for road and bridge improvements, a 70 percent hike that GOP lawmakers have said from the start of the session that they would reject.

The bill is expected to pass the Democratic-controlled House by a wide margin next week, but the GOP minority filed a long list of proposed amendments, setting up what could be a long debate. There's no gas tax increase in the Senate GOP majority's transportation plan, and it's unclear whether even a scaled-back hike can survive negotiations over the final package.

House Transportation Committee Chairman Frank Hornstein said the increase would provide a bigger long-term dedicated revenue source that can be spent only on roads and bridges. He said lawmakers have "cobbled together short-term plans" that fell short of the state's needs since the last time they raised the gas tax, in 2008.

"We need a reliable and sustainable transportation funding system that can weather the storms of recession and budget deficits and to keep up with the needs of our growing state," he said as the debate began.

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The House adjourned for Passover at midafternoon, putting off the heart of the gas tax clash for when lawmakers return Monday. Among the GOP amendments is one to require a statewide referendum on raising the tax.

The bill would raise the gas tax from its current 28.5 cents per gallon by 5 cents annually for four years, then peg it to inflation. It would raise about $600 million for road and bridge improvements in the two-year budget period that starts July 1, and more than $1 billion in 2022-23. The bill would also raise license tab fees. And it would bump the metropolitan area sales tax by a half-cent to raise about $400 million a year, split between public transit and other projects.

Republicans have seized on a recent Department of Revenue analysis of the governor's budget that shows the proposed gas tax increase is a major reason why his collective proposed tax hikes would fall hardest on lower and middle-income Minnesotans. The Senate GOP transportation package relies on existing revenues, partly from the state's projected $1 billion budget surplus.

The House and Senate are slogging their way through the budget bills that add up to the most important work of the session -- passing a balanced budget by the May 20 adjournment deadline. The House passed an agriculture and housing budget earlier Friday that includes measures to stop the spread of chronic wasting disease in the state's wild deer herd. The Senate passed its version earlier in the week.

After more than nine hours of debate, the House late Thursday passed a 1,043-page health and human services bill that includes a huge range of proposals, including a ban on so-called gay conversion therapy for minors and vulnerable adults.

It would also extend an expiring tax on health care providers that supports access to health care programs. It includes the governor's proposal to create a public option buy-in health plan for individuals called ONECare as an alternative to private insurance plans. It would help diabetics with their insulin costs. And its anti-smoking initiatives include raising the age for buying tobacco to 21 statewide.