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Senate approves transportation funding bill that excludes gas tax increase

The Republican-led Minnesota Senate passed a no-new-taxes transportation funding bill Wednesday night, setting up a showdown with Gov. Tim Walz and House Democrats, who back hefty tax increases for roads, bridges and mass transit. The Senate vote was 40-27, with five DFL defections.

But make the Senate’s package an “almost-no-new-taxes” plan.

While they rejected the 20 cents-per-gallon tax increase over four years backed by Walz and the DFL-led House, GOP senators found another revenue raiser they could live with: new fees on electric and hybrid cars.

The Senate bill would increase the annual fee on all-electric vehicles from $75 to $200, and it would impose a new $100 surcharge on plug-in hybrid cars.

Senate Transportation Committee Chairman Scott Newman, R-Hutchinson, said the fees would make drivers of electric-powered cars, who pay little or no gas taxes, foot their fair share of the cost of roads and bridges.

But not many Minnesota drivers would feel the pinch in their pocketbooks. Only about 0.6 percent of vehicles on the state’s roads are electric or hybrid cars.

The big difference between the competing transportation plans is that Walz and House DFLers want to raise nearly $1.5 billion in new money for roads and transit while Republican senators propose to keep that spending close to current levels.

In addition to raising the gas tax, the DFL package would increase license tab fees and motor vehicle sales taxes. The Senate bill raises none of those taxes.

Republicans argued that with a $1 billion projected budget surplus over the next two years, the state doesn’t need a tax increase. Newman warned that taking an additional $1.5 billion out of the pockets of Minnesota drivers would hurt the state’s economy.

Democrats disagreed. Margaret Anderson Kelliher, Walz’s state transportation commissioner, wrote in a letter to Newman on Wednesday that the Senate bill fails to provide enough money to meet future needs or “even maintain our existing infrastructure.”

“We currently have a list of more than 500 projects that could be constructed over the next 10 years with the additional dedicated transportation revenue proposed by Gov. Walz,” Kelliher wrote. Without that funding,” hundreds of projects and thousands of constituents will be left waiting in the wings, and Minnesota motorists will be forced to deal with increasingly dangerous driving conditions, deteriorating roads and worsening congestion.”

Walz and the DFL-led House propose to spend about $7.2 billion on transportation over the next two years. The Senate bill provides about $800 million less.

Despite their many differences, Newman said he and his House counterpart, Transportation Committee Chair Frank Hornstein, have worked well together in the past and should be able to hammer out a compromise this session.

The Senate bill also:

  • Provides no new money for metro bus and rail transit. “We simply don’t have the money,” Newman said.

  • Eliminates state funding for future light-rail train lines.

  • Bars use of state highway funds for bike lanes.

  • Prohibits testing of driverless vehicles in the state.

  • Increases the speed limit by 5 mph when a driver on a multi-lane highway is passing another vehicle.

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