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Legislative News and Views - Rep. Jerry Hertaus (R)

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Long-term transportation plans, budget work come to forefront

Thursday, March 26, 2015

 

By Rep. Jerry Hertaus, State Rep. District 33A

The House majority unveiled two proposals this week that will play important roles in the process of creating a new two-year state budget before the Legislature adjourns in late May.

The first proposal that was issued pertains to transportation. This is where the rubber meets the road: It is a 10-year, $7 billion package that focuses on roads and bridges. The topline theme is that it would replace an estimated 15,500 lane miles of road and 330 bridges without a tax increase.

It is officially known as the Road and Bridge Act of 2015 (H.F. 4). Instead of raising taxes, it relies on multiple facets to tap into revenue the state already is receiving. One provision would place general sales tax revenue already paid on auto parts into what would be a new dedicated fund called the Transportation Stability Fund. Estimates show that would generate approximately $2.57 billion over the next 10 years.

Many people are under the impression that tax revenues already generated from transportation-related purchases, such as automobile sales, leasing, repairs, parts and license tabs, currently are directed toward transportation maintenance. On the contrary, only a small percentage of this total revenue stream is spent on transportation. Instead it is collected into the General Fund and used for other purposes.

Secondly, in addition to the dedicated funds provided by the Transportation Stability Fund, the Road and Bridge Act of 2015 uses $1.3 billion in Trunk Highway bonds, $1.2 billion from realigning Minnesota Department of Transportation resources, $1.05 billion in General Obligation bonds, and $228 million in General Funds.

Some estimates for repairs of roads provided in the House proposal that would help local communities include:

  • $1.44 billion for county roads

  • $583 million for municipal roads

  • $282 million for small cities (fewer than 5,000 residents)

  • $60 million for township roads and bridges

The plan recognizes that our state has substantial revenue to establish and support our priorities without raising taxes by aligning our priorities with projected revenue and surpluses of $1.9 billion during the 2016-17 biennium. Meanwhile, Gov. Mark Dayton is proposing a 6.5-percent increase on gasoline at the wholesale level, which translates to a hike of approximately 16 cents per gallon at current prices and would continue to rise as the price of crude oil climbs – with no upper limit on the tax increase. His plan would increase Minnesota's All-Funds spending from the current $70 billion to $77 billion in the next biennium.

The remainder of the budget discussion this session will likely be focused upon the core ideological differences between Democrats consistently attempting to fulfill every desire and expectation with more spending and higher taxes, while Republicans will face the difficult challenges of aligning spending priorities with the most recent revenue forecast and projected budget surplus without usurping the priorities of hardworking Minnesotans by further increasing their taxes.

The governor's proposal, if adopted, would result in a 25-percent increase in state spending since 2013. This rate of growth is unsustainable and we must restrain spending growth to not outpace growth in the overall economy.

The House proposal includes:

  • Total General Fund spending of $39.95 billion, a $1.4 billion increase, or 4 percent, from the current budget;

  • An additional $100 million being put in the budget reserve;

  • Overall tax relief of $2 billion for Minnesotans;

  • Unallocated money of $314 million, which will be available for further spending if needed, the budget reserve, or other uses as the session develops.

This contrasts with the governor's plan which spends $43 billion in the General Fund ($77 billion in All-Funds) and raises taxes by $9 billion over the next decade, including the aforementioned gas tax.

The important thing to remember is the Senate's budget plan remains to be seen and that will play a significant factor as we try to put a plan in place which will require agreement from all three legs of the stool at the Capitol.

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