Gas tax — tied to inflation — is on the table at the Legislature

Minnesota lawmakers are considering increasing the state gasoline tax to help pay for roads and bridges.

The tax on a gallon of gas is now 28.5 cents — lower than Iowa and Wisconsin but higher than North and South Dakota.

The last time the tax on a gallon of gas was increased was in 2008 — after the freeway bridge collapse.

“There’s conversation but we haven’t made any decisions,” said Rep. Frank Hornstein, DFL-Minneapolis, who chairs the transportation finance conference committee. “Staff is working with us on spreadsheets, and in the next day or two we’ll have some definitive numbers.”

The House approved a 75-cent fee on deliveries of packages from places like Amazon, DoorDash and restaurants for transportation and a 0.75% regional sales tax increase to fund Metro Transit. The Senate approved a 0.5% metro sales tax increase and no delivery fee, and Gov. Tim Walz has proposed a 0.125% sales tax for transit. Hornstein also proposed a fee on Uber and Lyft rides.

Hornstein said the Senate is looking seriously at the delivery fee, but maybe not at the level the House approved, at $168 million per year and growing.

He said lawmakers won’t be able to meet all the needs to maintain the nation’s fourth largest road network. Transportation planners say Minnesota needs $27 billion to maintain roads and bridges, and the state projects a $17.7 billion shortfall for road maintenance through 2042.

“We’re not going to reach the entire need,” Hornstein said. “But we have a historic opportunity to pass a transportation bill that hasn’t been done quite like this before.”

The last time Democrats controlled the Legislature and the governor’s office was in 2013-14. They took a pass on a gas tax increase, and have been stymied by divided government ever since. 

The delivery fee would be flexible revenue that’s not constitutionally dedicated, Hornstein said.

Indexing the gas tax — automatically adjusting it for inflation — has been talked about for years and was passed by the House in 2021, but not this year. Until now.

“It would be small if we were to do it at all,” Hornstein said. “We’re doing what we always do here which is evaluating the need, what sources of revenue are available, how we can put together a package that’s going to address the needs for the future.”

After hearing lawmakers were considering increasing the gas tax, Walz said he’s open to increasing the gas tax, but noted it wasn’t part of his budget proposal, KSTP reported.