Republicans propose redirecting General Fund revenues to roads, bridges

House Republicans have renewed their push to increase state funding for road and bridge projects by redirecting motor vehicle-related sales taxes from the General Fund.

The House Transportation Finance Committee on Tuesday approved a handful of bills that would shift toward transportation needs revenues generated through taxes collected on items like tires, vehicle parts, and motor vehicle lease sales.

It resurrects part of a Republican proposal first introduced two years ago to use existing state funds to cover what studies have said is a $600 million annual funding shortfall for construction and repair on roads and bridges across the state.

Rep. Jeff Howe (R-Rockville) said that shifting existing vehicle-related revenues is an important piece of any long-term road and bridge funding solution. He sponsors HF638 that would allocate sales tax on motor vehicle parts to the Highway User Tax Distribution Fund.

Senate President Michelle Fischbach (R-Paynesville) sponsors a companion, SF990, awaiting action in the Senate Transportation Finance and Policy Committee.

Howe said Minnesota — with its legislators long deadlocked on how to increase funding for roads and bridges — is among a dwindling number of states that does not use General Fund dollars to help fund its transportation needs.
“This is how we get into that,” he said.

DFLers on the committee renewed their criticism of the Republican plan for boosting funds available for transportation. In reality, they said, the proposals don’t create any new revenue at all, pits Minnesota’s roads against the state’s other needs and could be shifted away from transportation by future legislatures.

Rep. Michael Nelson (DFL-Brooklyn Park) called it a case of “robbing Paul, here, to pay Peter.”

“We’re just shifting money around,” Nelson said. “There’s no new money in these bills.”

Other bills approved Tuesday and referred to the House Taxes Committee that would move revenues from the General Fund toward transportation needs were:

• HF460, sponsored by Rep. Chris Swedzinski (R-Ghent), would dedicate the state’s extra 9.2 percent sales tax collected on short-term motor vehicle leases to fund the Corridors of Commerce program. A companion, SF556, sponsored by Sen. Gary Dahms (R-Redwood Falls), awaits action by the Senate Transportation Finance and Policy Committee;
• HF502, sponsored by Rep. Dale Lueck (R-Aitkin), would — phased in over three years —dedicate a portion of sales taxes collected on the sale of motor vehicle taxes to the Highway User Tax Distribution Fund. Its companion, SF754, sponsored by Sen. Carrie Ruud (R-Breezy Point), awaits action by the Senate Taxes Committee; and
• HF901, sponsored by Rep. John Koznick (R-Lakeville), would change the allocation of the 6.875 percent state sales tax on long-term motor vehicle rentals to redirect 50 percent of revenues toward Greater Minnesota Transit and 50 percent toward County State Aid Highway Fund for the Twin Cities metro area collar counties (excluding Hennepin and Ramsey). Sen. Dan Hall (R-Burnsville) sponsors a companion, SF932, also awaiting action by the Senate Taxes Committee.

In contrast to the proposals put forward Tuesday, DFLers — including Gov. Mark Dayton — have, in recent years, pushed for an increase in the state’s gas tax as a way to increase road and bridge funding. It’s an approach they’ve said represents a more sustainable approach.

The state, however, would be better served by reprioritizing its existing funding, Rep. John Petersburg (R-Waseca) told the committee.

“I’m hearing from a lot of people, ‘Please, you’ve taken enough,’” he said.

Another bill approved by the committee, HF963, sponsored by Rep. Steve Green (R-Fosston), would exempt the Department of Transportation from paying sales tax on materials for road construction projects. That, according to a fiscal note provided by Minnesota Management and Budget, would save MnDOT an estimated $7.5 million per year and cost the General Fund $7.1 million annually. It, too, was referred to the House Taxes Committee.

A companion, SF834, sponsored by Sen. Paul Utke (R-Park Rapids), has been referred to the Senate Taxes Committee.