ST. PAUL – Gov. Tim Walz released his budget proposal for the 2020-21 biennium on Tuesday, highlighted by more than $3 billion in tax increases over the next two years alone, and $4.7 billion in tax increases for 2022-23.
The governor’s proposal would raise Minnesota’s gas tax by 20 cents – a 70-percent increase – vaulting Minnesota’s gas tax to fourth-highest in the nation.
“If the governor wants more money for transportation, there are plenty of other places we could trim waste, fraud and abuse to obtain additional revenue before going back to the taxpayers for more,” said Rep. Lisa Demuth, R-Cold Spring. “The governor’s proposal to raise the cost of gasoline by 20 cents per gallon is concerning, especially since any increase in the gas tax would hit lower earners and the people of Greater Minnesota in general the hardest.
“Most of us agree we need to improve our roads and bridges. Instead of raising the gas tax, my preference is to seek solutions that involve accessing stable, long-term streams of funding through existing revenue. The plan which was enacted last biennium to redirect existing sales taxes paid on the purchases of auto parts toward roads and bridges has been a very successful approach. More opportunities such as that should be explored before we even think about heading down the path of increasing the regressive gas tax.”
The governor’s plan also includes increases to tab fees, the motor vehicle sales tax, the metro area sales tax, business taxes, and reinstatement of the sick tax, which is set to expire at the end of the year, adding $1 billion to the cost of health care for Minnesotans over the next two years.
In 2020-21, the governor’s budget raises general fund tax revenue by $1.2 billion. The extension of the sick tax adds an additional $947 million, with transportation-related taxes adding $907 million for a total tax increase of $3.1 billion. In 2022-23, the tax increases balloon dramatically; the governor increases general fund tax revenue by $1.4 billion, with another $1.5 billion for the sick tax and $1.7 billion in transportation taxes.