A proposed constitutional amendment to dedicate additional sales tax revenues exclusively to transportation projects has scored its first victory in the Minnesota legislature, but critics say the plan would strip away funds for other needed programs.
The bill authored by state Sen. Scott Newman, R-Hutchinson, passed the Senate Transportation Finance and Policy Committee and now heads to the Committee on Rules and Administration. Newman chairs the transportation panel.
The Minnesota Chamber of Commerce and groups involved in the construction trades favor the proposal, which would earmark sales tax funds resulting from auto parts purchases and car repairs for highways, bridges and other transit-related projects. But public education officials and some groups representing local governments and public employees oppose it.
During a recent Senate hearing on the bill, Newman pointed to how transportation projects bolster the state’s economy and generate needed jobs.
“There isn’t a person in the state of Minnesota that has not benefited by good roads and safe bridges,” the senator said.
But Mark Haveman, executive director of the Minnesota Foundation for Fiscal Excellence, panned the idea and said it would lock in funds for one public service at the expense of others.
“We don’t support constitutional dedication of general fund revenues,” Haveman told Watchdog.org. “That’s the legislature’s responsibility to allocate based on priority and need.”
The proposal now advancing in the Senate also represents a dangerous precedent if it passes the legislature and makes its way to the November ballot, he said.
“What’s to stop schools from saying, ‘Well, you know what, all those back-to-school sales of notebooks and paper and pencils … Department of Revenue, you should figure out what that is, and let’s dedicate that to schools’?” Haveman said.
The case for requiring gas taxes to go exclusively to transportation is stronger, he said, but the state’s constitution should be a document that defines general governing principles, as opposed to getting into the weeds of fiscal issues.
“It reduces the flexibility in the future and potentially distorts spending decisions …” Haveman said. “This is the equivalent of not only locking [revenues] up but throwing away the key.”
If lawmakers truly want to devote more funds to transportation, they can push for an increase in the gas tax, he said.
But Bentley Graves, director of health and transportation policy for the Minnesota Chamber of Commerce, points out that the legislature last year dedicated funds generated from vehicle rentals and leases to transportation projects such as roads. The current bill would simply build on last year’s changes and allow for the state to keep pace with construction costs and needs, according to Graves.
The argument that the plan will strip out funding for other programs and services is overblown, he said.
“We’re talking about dedicating roughly $250 million a year, a tiny fraction of the state’s overall general fund budget,” Graves told Watchdog.org.
The $250 million would consist of the nearly $150 million that has already been dedicated for transportation by the legislature plus the $100 million that Newman’s proposal would eventually provide, he said. In comparison, the entire state budget is about $20 billion.
The state’s fuel tax was increased in 2008, according to Graves, but it tends to be a flat funding source over the long term. And lawmakers have not been inclined to increase that tax in more recent years.
“It frankly isn’t in the cards in the legislature at this time,” he said.
The chamber’s polling on dedicating more general fund revenues to transportation shows it has strong bipartisan support, Graves said, adding that everything is on track to get the plan before the state’s voters this year.
“There’s certainly time to do it,” he said. The governor doesn’t have to sign it in order for the legislature to put it on the ballot, Graves added.
Bradley Peterson, executive director of the Coalition of Greater Minnesota Cities, agrees with supporters that the transportation infrastructure needs more revenue for upkeep and expansion. But he sees the potential of other programs getting squeezed if voters back Newman’s proposal.
“Local government aid tends to be one of the first things that gets whacked,” Peterson told Watchdog.org.
The coalition has supported increasing the gas tax, which is already dedicated to transportation projects, he said, but walling off more and more general fund revenues for special uses is not the solution.
“We don’t disagree that transportation has been neglected,” Peterson said.
The Association of Minnesota Counties, meanwhile, has expressed some ambivalence toward the idea of a constitutional amendment. The association’s platform supports dedicating revenue from the auto parts tax for transportation purposes, but some of its member counties have raised objections to a constitutional amendment at a time when other county services depend on the state’s general fund, according to a letter the association sent to the Senate transportation panel.
Peterson doesn’t see passage of Newman’s proposal as guaranteed. At the transportation panel hearing, all the Democrats and one Republican voted against it, he said.
“It has not been introduced yet in the House,” Peterson said. “It does not yet have traction over there.”