Minnesota’s $1.3B Transportation Deal Includes Gas Tax Hike

Increase Would Generate an Estimated $155 Million Over Two Years
Vehicles on a wet Minnesota road
Vehicles on a wet Minnesota road. The gas tax provision will result in a 5-cent increase over the current rate of 28.5 cents a gallon by fiscal year 2027. (Elizabeth Flores/Tribune Content Agency)

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Lawmakers on May 21 sent the governor a $1.3 billion deal bolstering Minnesota’s extensive transportation network over the next two years — an agreement that Democrats called “historic,” while Republicans fumed over a last-minute move that would boost the state’s gas tax.

The House passed the measure 69-61 following vigorous debate. The Senate soon followed, passing it on a party-line vote with Sen. Eric Pratt (R-Prior Lake) absent.

If Gov. Tim Walz signs it as expected, the bill would index the gas tax to inflation, resulting in a 5-cent increase over the current rate of 28.5 cents a gallon by fiscal year 2027. The bill that was debated on May 21 would also raise a metro-area sales tax to fund transit projects and add a 50-cent fee on deliveries over $100.

The gas tax increase would generate an estimated $155 million over two years.

“So many of our [transportation] needs were put off for so long,” said Rep. Frank Hornstein, a Minneapolis Democrat who chairs the House Transportation Finance and Policy Committee. “We couldn’t afford to do nothing. Successful regions have great infrastructure.”

But Waseca Rep. John Petersburg, the lead Republican on the transportation committee, characterized the gas tax increase and other fees as “regressive,” hurting “those who are having the most troubles.”

Walz said indexing the gas tax to inflation will give the state a more reliable transportation funding source over the next 20 years. Walz, whose proposal to raise the gas tax in 2019 went nowhere under divided government, pushed back on the notion that Democrats “overreached” this year.

“It’s not an overreach to fix the roads,” Walz said.

But beyond debate over the tax and fee increases, the bill contains a number of wide-ranging provisions that would likely touch every Minnesotan. It includes much-needed road and bridge repairs, electric bike credits and other measures to combat climate change, safety initiatives involving public transit, freight rail and highways and a critical investment in future passenger rail service between the Twin Cities and Duluth.

The measure sets aside $195 million to support the Northern Lights Express (NLX) project, passenger rail service between the Twin Cities and Duluth, with stops in Coon Rapids, Cambridge, Hinckley and Superior, Wis. The 152-mile line, expected to cost about $779 million, would be eligible for a federal matching grant now that state funds are forthcoming.

Rep. Kurt Daudt (R-Crown) called the allocation a “waste of money. Didn’t we learn our lesson from these other rail projects?” He added the new fees and tax increases in the bill were levied by “gluttonous” Democrats who are “drunk with power.”

To address burgeoning crime aboard Metro Transit, which increased by nearly two-thirds in the first quarter of 2023, lawmakers were slated to adopt a number of measures intended to bolster safety on trains and buses.

Transit advocates have long sought changing the penalty for fare evasion from a rarely prosecuted misdemeanor with a penalty up to $180 to an administrative citation akin to a parking ticket. The bill would also expand Metro Transit’s ability to use personnel other than police and community service officers to check fares and issue administrative citations.

The idea, they say, is to free up police to tackle more serious crimes.

The bill also sets aside $2 million this year to launch a temporary project that calls for “interventions” with passengers on the Green and Blue light-rail lines who may be experiencing homelessness or mental health and addiction issues, and connect them with social services. This comes as drug and alcohol use on light rail has skyrocketed, making many passengers feel unsafe as Metro Transit tries to regain ridership following the COVID-19 pandemic.

Some $25 million has been set aside to overhaul Rice Street near the Capitol in St. Paul, including a multimodal hub at the Green Line light-rail station.


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A study would determine whether it is feasible to extend Northstar Commuter Rail service to St. Cloud. The line now stops at Big Lake, and has struggled to lure passengers back following the pandemic. The assessment would also probe possible rail service improvements in the same corridor between St. Paul and Moorhead.

And in an unusual move, given bipartisan animus over the controversial Southwest light-rail project, lawmakers set aside $50 million to help design and build the Blue Line light-rail extension between downtown Minneapolis and Brooklyn Park. However, $40 million of that amount won’t be funneled to the Metropolitan Council until federal funding is finalized.

Met Council Chair Charlie Zelle praised the new sales tax to bolster public transit in the metro, saying it would “serve generations to come.”

“The sustainable funding for transit will allow us to provide and maintain a system that helps address our region’s mobility, equity and climate goals,” said Zelle.

But the largesse would be prohibited from being used to prop up the 14.5-mile Southwest light-rail line between Minneapolis and Eden Prairie, which has been plagued with cost overruns and delays.

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Southwest’s high-profile troubles prompted a bipartisan call at the start of the session for Met Council members to be elected, rather than appointed by the governor. The bill proposes forming the Metropolitan Governance Task Force, which would recommend Met Council reforms to state lawmakers by next February.

The bill would qualify buyers of electric bikes for credits up to $1,500, based on a popular program in Colorado.

And it would require the Met Council to study extending the Midtown Greenway, a popular bike path in south Minneapolis, to St. Paul over a bridge currently owned by CPKC railway.

By Janet Moore, Jessie Van Berkel and Briana Bierschbach

Distributed by Tribune Content Agency, LLC