02-24-1988 Council Agenda - Laserfiche WebLink

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Page 4 In increasing its gasoline tax (which has been unchanged since January 1, 1984) Minnesota would be following a clear national trend which has seen eighteen states increase their gasoline taxes since September 1, 1986. Among these states is Wisconsin, which in 1987 increased its tax to 20 cents per gallon. We expect that a number of other states will adopt increases in 1988, including possibly Iowa where the state Transportation Commission has proposed raising that state's 16 cent tax by three cents. Recommendation No, 2. The share of Motor Vehicle Excise Tax revenues eoing to transportation should be increased from the present 5% to 35 %t As has been noted, many persons who testified before the Commission felt strongly that the excise tax on motor vehicles is as much of a highway user tax as are the gasoline tax and motor vehicle license taxes, and should be dedicated to highways just as those taxes are. We believe that this testimony is representative of a sizeable portion of public opinion. The fact that many people believe that the MVET was always dedicated to highways, and that the legislature in 1983 took it away from highways and has refused to give it back, reflects not so much an erroneous view of the legislative history of MVET as a deep- seated sense that an MVET dedication to highways is fair and equitable. The Commission agrees with this public sense. Additional funds are needed if transportation is ever to become a stimulus for economic development, and the excise tax must be an essential component of a funding package. We recognize the strong feeling on the part of many members of the legislature that they cannot accept an increase in the gasoline tax without a substantial increase in the share of MVET going to highways. We further believe that both sound policy and the necessity of public acceptance of any funding package require that the present division of MVET's transportation share between highways and transit (75% to highways, 25% to transit) be retained. The excise tax is of particular importance as the legislature is faced with proposals to reexamine highway jurisdiction in Minnesota. Because it is free of constitutional requirements for its distribution among state and local governments the excise tax is the only potential highway user tax with the flexibility to finance transfers of highways among jurisdictions. The additional 30% transfer would increase the total share of the excise tax going to transportation to 35 %. The 30% figure was selected in order to keep the proposal within the realm of feasibility given the focal realities facing the next legislative session and also to provide a rough parity in the total package between MVET revenue and gasoline tax revenue. Table I shows the anticipated revenue from the Commission's transportation financing proposal. The trunk highway share will be sufficient eventually to restore all the projects deferred from the current biennium's highway improvement plan and avoid more than 80% of the probable deferrals in the next biennium. While this package does not go as fax as some of us would like in providing revenue for state highways we feel that it is the largest highway funding package which can realistically be presented to the legislature. The total amount which the package will raise for statewide transit assistance over the next three years is about $52.1 million, or an average of 317.4 million per year. It will be up to the legislature to determine how much of this money will be used co augment present transit appropriations from tin general fund and how much will be used to replace those general fund appropriations. The Commission recommends that whatever this decision is, the following financing objectives should be met: 1. The dedication of revenue from driver license fees which was used to supplement transit appropriations in the 1988-89 biennium should be repealed for fiscal 1989, and that money be provided from the new MVET revenues going into the transit assistance fund (the dedication is Page 63