Mn governor proposes a .20 gal fuel tax hike.

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Minnesota governor proposes 20-cent gas tax hike



Minnesota Gov. Tim Walz said in proposing a gas tax increase that the state’s transportation system is aging and struggling to keep up with the demands of the state’s growing population. (Courtesy: MINNESOTA GOVERNORS OFFICE.)

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ST. PAUL, Minn. — Minnesota Gov. Tim Walz is proposing to phase in a 20-cent increase in Minnesota’s fuel tax over the next two years and index that tax to inflation as part of his overall state budget proposal unveiled last week, according to an article in the Journal of the American Association of State Highway and Transportation Officials.

“Minnesota’s transportation system is aging and struggling to keep up with the demands of our growing population,” the governor noted in the fact sheet accompanying the release of his proposed budget.

“The Minnesota Department of Transportation projects that in order to simply operate and maintain our current roads and bridges, the state will need $18 billion over the next 20 years above current revenues,” Walz said.

To accumulate those funds, Walz said he plans to:

• Initiate a 20-cent fuel tax increase, phased-in over two years, and index that tax to inflation beginning in fiscal year 2023. Combined together, those tax changes are expected to raise approximately $6.5 billion over 10 years.
• Increase the vehicle registration tax from 1.25 percent to 1.5 percent, while boosting the base tax fee from $10 to $45 and changing the depreciation schedule. That is projected to raise approximately $4 billion over ten years.

• Increase the motor vehicle sales tax from 6.5 percent to 6.875 percent. That would raise approximately $505 million over 10 years, with $300 million going towards roads and bridges and $205 million for “transit purposes.”
• Authorizing $2 billion in trunk highway bonds over eight years starting in 2022.
• Establish a 1/8-cent sales tax in the seven-county metropolitan area to maintain and expand the regional bus and transitway system, generating approximately $770 million.

• Authorize $20 million in general obligation transit bonds, with a goal of totaling $230 million in bonding over the next 10 years.

The governor also proposed to add 10 new bus rapid transit lines over the next decade as part of his budget plan; an expansion that would result in a 40 percent increase in service on the region’s busiest routes and an estimated 30 to 40 percent increase in regional transit ridership.

Minnesota governor proposes 20-cent gas tax hike