Gas taxes, transportation funding likely to loom large in 2015 session

Minnesotans once again have divided government, but that doesn’t necessarily mean the relentless barrage of tax hikes has come to an end. The Associated Press reported on the new balance of power at the Capitol: "None of the power players offered much Wednesday about specific policies they'll pursue. Generally, they stressed a need to work out a long-term transportation funding plan to deal with a multibillion-dollar backlog in road and bridge projects."

Nonetheless, it is safe to assume that transportation taxes will be at the top of Governor Dayton’s 2015 legislative agenda, especially in light of his proposed gas tax hike proposal put forth during one of the gubernatorial debates last month. At the time, Dayton "said he wanted a ‘sales tax on gasoline’ intended to raise $6.5 billion over the next decade to keep the state’s transportation infrastructure in good repair." He later back-pedaled, but said he is considering a gross receipts tax on wholesale gas. Liberal senators could also revive their own plans to impose a new tax on gasoline at the wholesale level. A wholesale gas tax is appealing to some tax hike advocates because they can claim it is paid by oil companies even though it is inevitably passed along to consumers in the form of higher prices at the pump. Last year, Senate Democrats released a transportation budget proposal that "offset" a 5.5-percent wholesale gas tax with a 6-cent reduction in the gas tax at the pump, which makes for shrewd politics but bad policy, resulting in a less transparent and efficient tax system. That’s because wholesale gas taxes are tied to the price of gas, while the (Read this April 2014 commentary by Freedom Foundation CEO Annette Meeks for more on the issue.)

One of the major influencers at the Capitol to watch in the coming months is Move Minnesota, the large coalition of labor unions, transit advocates, transportation contractors, and other special interests that is leading the charge for a "comprehensive solution" to state transportation funding. They are seeking "a long-term, comprehensive solution to fixing our roads, bridges, transit systems (bus and rail), and bike and pedestrian infrastructure," and their agenda is likely to mirror that of Governor Dayton and liberal legislators. Among the items on the group’s tax agenda: a 5-percent wholesale gasoline tax, "extending and increasing the metro’s sales tax," and "reforming the current [gas] tax to grow with the economy," presumably by indexing the gas tax to inflation, resulting in automatic annual tax hikes.

It’s worth noting that voters in Massachusetts approved a ballot measure Tuesday to eliminate gas tax indexing, putting an end to automatic tax hikes.

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