Minnesota officials continue discussion on road funding

October 22, 2019

Keith Goble


Discussion is expected to heat up again at the Minnesota statehouse about how to raise additional revenue for needed transportation work around the state.

Minnesota Department of Transportation Commissioner Margaret Anderson-Kelliher is advocating for a combination fuel tax increase and “debt-service fee.” The combined increases would amount to as much as an additional 15 cents per gallon.

The debt-service fee would increase fuel prices to help eat into the expense of borrowing to pay for road work.

Gov. Tim Walz and House Democrats have pushed for a fuel tax increase since the governor took office. Specifically, the governor has called for nearly doubling the state’s 28.5-cent excise rate on gas and diesel.

Republicans are opposed to more taxes. Some say the debt-service fee amounts to a tax. They point out that Minnesota residents do not want a tax increase.

Walz has said the state needs $18 billion over the next two decades simply to operate and maintain current infrastructure. The governor’s proposed tax increase is estimated to raise $18 billion over the next 20 years.

To help eat into the funding gap, he wants to increase the 28.5-cent excise rate on gas and diesel by 20 cents over two years. At that time, the excise rate would reach 48.5 cents.

The tax increases, however, would not end there. Walz has proposed to also index the tax to inflation, which would allow for regular increases.

It is estimated that the tax increases would raise about $6.5 billion over 10 years.

House Democrats have pursued raising the fuel tax rate by 5 cents annually over four years. They have not proposed an indexing component.

Senate Republicans oppose a tax increase. Instead, they say the state would be better served to tap a $1 billion budget surplus.

Transportation funding solutions are expected to take center stage once the regular session begins in January.