Minnesota Legislature enters final day after taxing weekend
Minnesota legislators face a midnight Monday deadline to finish the 2023 session after a busy weekend spent passing major elements of the DFL-authored budget plan.
On Sunday, the Legislature took final votes on a bill authorizing tax rebates as well as on a transportation plan that brings a higher gas tax, a boosted metro sales tax and a new delivery fee to pay for projects.
The transportation finance package will put $3.7 billion in new money into the system over the next four years.
Senate Transportation Chair Scott Dibble, DFL-Minneapolis, said it will improve roads, railways, transit routes and other infrastructure. But he’s upfront about the fact it will cost drivers, online shoppers and others more through various taxes and fees.
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“There is no surplus in transportation in Minnesota," Dibble said. “The sources and resources that we rely on to support transportation are outside of the general fund. And they're stagnant or they're in decline. They're losing revenue; they're losing ground to inflation.”
The gas tax will rise by a measure of inflation each August. Officials estimate it will increase by about five cents by 2027. The tax is 28.5 cents per gallon now.
Rep. Erin Koegel, DFL-Spring Lake Park, said even while electric and hybrid vehicles gain popularity, highway construction depends heavily on the gas tax.
“We know gas is not going away anytime soon. I have a gas vehicle. My husband drives a gas vehicle. His work has a gas vehicle. Our boats all run on gas,” Koegel said. “So gas is going to be around for a while. And it's really the workhorse of our transportation system. And we haven't raised the gas tax since 2008.”
To supplement it, lawmakers created a new 50 cent fee on item deliveries of at least $100 in value; food and other essentials are exempt.
No Republicans voted for the bill, and many teed off on the proposed tax increases even as others commended some of the projects funded by the bill.
“It’s gas tax, delivery tax, tabs registration for your vehicle tax — whatever you want to call it, it's all going up, said Rep. Natalie Zeleznikar, R- Fredenberg Township.
“Raising these burdens on our state drivers at a time when we have this huge surplus just makes no sense to me,” said Rep. Paul Torkelson, R- Hanska.
“This is an insatiable appetite for raising taxes in the state of Minnesota, said Rep. Bjorn Olson, R-Fairmont. “And it is a problem. It will become a problem.”
It was part of their theme for the weekend. And Democrats were ready with counterpunches.
“Your constituents know driving around right now is particularly hazardous. Who in our district doesn't have potholes or broken roads, structurally deficient bridges? We are so far behind in fixing our roads, bridges and transit system,” said House Transportation Committee Chair Frank Hornstein, DFL-Minneapolis.
And House Taxes Committee Chair Aisha Gomez, whose tax plan also passed this weekend, defended the DFL approach.
“Taxes are why we have public goods,” said Gomez, DFL-Minneapolis. “They're why we have roads and bridges and transit, and they're why when you call 911 somebody answers and comes to aid you. That's what taxes pay for. Taxes are not an isolated evil. Taxes are the cost of living in a society.”
That broader tax bill will mean $260 rebates for many taxpayers and their dependents, up to $1,300 back in a household. Married filers earning more than $150,000 in adjusted gross income or singles above $75,000 won’t see a rebate.
The package boosts an exemption for Social Security income so three-quarters of recipients won’t pay state taxes on those benefits. It creates a child tax credit. And various property tax and renter tax relief programs will be expanded.
Sen. Bill Weber of Luverne was part of the unified Republican opposition to the bill over tax increases on some investors and multinational companies. And he said the rebate is meager and leaves too many taxpayers out.
“There are thousands and thousands of people in this state who contributed greatly to a historic surplus and who are receiving very little back,” Weber said.
Both the tax and transportation bill passed on party-line votes. They could resurface in future campaigns.
Gov. Tim Walz said that’s fine with him.
“I've said it before that you don't gain political capital to think about the next election,” the DFL governor said. “You gain political capital to burn it to improve lives. And Minnesotans know that this will do that.”