ST. PAUL, Minn. (AP) — After backing off a proposed gas tax increase in the face of opposition from Gov. Mark Dayton, state Senate Democrats on Wednesday proposed an alternative in the form of a new sales tax on fuel sales at the wholesale level as a way to raise money for road and bridge projects.
The revised proposal from Sen. Scott Dibble would actually cut the state’s 28.5-cents-a-gallon gas tax by 6 cents a gallon. But it would replace it with a 5.5-percent tax that oil companies would pay at the wholesale level. Dibble said that would net the state an additional $200 million a year for roads and bridges.
Dibble acknowledged that drivers might still end up feeling some of that increase at the pump, but said it’s a way to shift some of the direct burden of the increase away from consumers.
“It may or may not be passed through. That’s entirely the choice of distributors,” said Dibble, DFL-Minneapolis, chairman of the Senate Transportation Committee. “Gas prices are so volatile and so responsive to other things, so who knows?”
Dayton has said he sees a need to boost state transportation funding, but thinks there’s not enough public support to raise the gas tax. Dibble said he made the change in hopes of addressing Dayton’s concerns. He said 16 states levy some kind of wholesale fuel tax.
After he initially yanked the gas tax increase last week, Dibble said it would mean a “status quo” transportation budget without big infusions of new money to hasten construction and renovation of roads, bridges and transit projects. The new proposal, he said, is a move to go past the status quo.
“This is a comprehensive, significant advance, an investment in our economy and our transportation system that will mean jobs,” Dibble said. “We’re still not sure exactly where the governor is but we’re trying to move the legislative conversation toward him.”
Dayton’s spokeswoman said he hadn’t yet had time to examine the new proposal and would not have an immediate comment on it.
Dibble’s bill restores another provision he had initially ditched: a half-cent sales tax increase in the seven counties that make up the Twin Cities metropolitan area. Money raised from that would pay for new transit options.
In the House, transportation budget chief Rep. Frank Hornstein also jettisoned the gas tax increase and the metro sales tax from his bill in response to Dayton’s opposition. Hornstein said Wednesday that the House was likely to vote on his scaled-back bill, but that Dibble’s more ambitious plans would likely be on the table in a transportation conference committee later in the session.
“There’s still a lot of room for movement in the budget for transportation,” said Hornstein, DFL-Minneapolis. Earlier Wednesday, Hornstein spoke at a Capitol rally organized by groups that want a bigger spending hike for transportation projects. He led the crowd in a chant: “If not now, when?”
Calls for transportation spending increases often defy the Capitol’s partisan divide in a way that other state spending proposals do not. Business groups have been among those arguing that transportation upgrades would be a needed boost for the state’s economy, and Wednesday’s rally featured several Republican senators standing alongside Democrats in their calls for transportation spending increases.
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