Minnesota Senate plan relies on federal funds, auto parts tax revenue for roads

April 20, 2022

Keith Goble

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Work continues at the Minnesota statehouse to approve a comprehensive transportation funding plan.

The Senate Transportation and Finance Committee voted along party lines to advance a bill to provide more than $5.7 billion for transportation over five years.

Roads and bridges would receive the bulk of the funds – $4.32 billion.

Bill supporters tout the funding plan that relies on federal aid. They point out that the plan does not rely on a fuel tax, mileage tax, sales tax, or license tab fee increase.

Auto parts sales tax

The Senate bill, SF1154, would also dedicate 100% of tax revenue from auto parts sales to roads. The amount would total $550 million over the next three years.

The state now puts a fixed portion ($145.6 million annually) of the taxes from the sale and purchase of motor vehicle repair and replacement parts to the highway user tax distribution fund. The other half is deposited into the state’s general fund.

Advocates say applying all tax revenue from auto parts sales to transportation would allow the state to rebuild the state’s transportation infrastructure without raising fuel taxes, tab fees, or sales taxes.

Senate Transportation and Finance Committee Chairman Scott Newman, R-Hutchinson, said the state has “plenty of money” to apply to transportation without resorting to asking Minnesotans to pay more.

Newman adds that billions have been pumped into transportation infrastructure since 2017.

“This bill will allow Minnesota to continue creating a world-class transportation system without new gas taxes, tab fees, or mileage taxes,” Newman said in a news release.

SF1154 would provide $280 million in 2022-2023 to secure the state’s share of federal transportation funding allocated by the Infrastructure Investment and Jobs Act of 2021.

Minnesota’s share of funding is projected to top $5.7 billion over the next five years.

State and local projects would benefit

The bill would make available an additional $982.98 million for state roads and bridges, $154.5 million for Corridors of Commerce, $303.59 million for county highways, $79.75 million for municipal highways, $69.1 million for town roads, and $69 million for small cities assistance.

A portion of the auto parts sales tax revenue would be designated for road and bridge grants to cities and townships.

Currently, the town road account receives an annual funding dedication of 1.5% of all highway user tax distribution. The small cities assistance account does not receive any dedicated funding.

Critics say the bill falls short

Senate Democrats say the budget bill “falls woefully short” of addressing the needs of the state’s transportation network. They say that the bill would limit the state’s ability to access federal funds for infrastructure upgrades, block investments necessary to prepare for electric vehicles, and ignores efforts to lessen climate change.

“Reducing emissions in our transportation sector is critical to addressing climate change. It is now or never to get this done, and we cannot afford to leave dollars on the table towards this goal,” a Senate Democrat news release reads. “Unfortunately, (SF1154) would all but guarantee we fall further behind.” LL

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Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.