Pat Kessler of WCCO (channel 4) news devotes his latest “Reality Check” segment to the ins and outs of transportation funding. I’m glad he did — I think this provides some good background information for policy debates to build off of. You can check out the full video here, but here are some excerpts from the transcript as well:
It’s TRUE. Every penny of Minnesota’s 20-cent-a-gallon gas tax — about $650 million a year — goes into roads and bridges. So does the money from license tabs, which adds up to about $500 million a year.
…
That’s NOT THE WHOLE STORY. Until now, motor vehicle sales taxes went right into the state’s general fund, but voters last year approved a constitutional amendment dedicating all that money — $300 million a year — for transportation only.It’s still not enough and HERE’S WHY. The state’s at least $1.5 billion short of what it needs for transportation projects. It’s partly because the gas tax hasn’t gone up and partly because we borrowed money for roads, and now we’re paying it back, with interest.
Construction costs have also skyrocketed.
I think Kessler did a good job of staying non-partisan in his analysis but I would like to point out to the conservative readers of this blog that part of the problem is the interest we’re having to pay back on money borrowed for roads. I have consistently argued against patching our transportation budget shortfall with bonding because it creates these sort of problems down the road (pun only kind of intended). So, when people try to tout Tim Pawlenty’s proposed transportation package of last session keep in mind that it was almost entirely bonding and even then it was only $1.7B over 10 years when MNDoT is, by conservative estimates, falling short by $1.5B every year. Just some food for thought.
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Matt,
What is your solution? To make up for $1.5 billion annually on the gas tax alone, it would require us to raise the gas tax (and therefore the price of gas) 50 cents a gallon. Is that your proposal?
Average
Year Gas Price Gas Tax Gas Tax %
1988 $1.00 $.20 20%
2007 $2.50 $.50 20%
Unleaded regular.
The actual 1988 was a little lower.
2007 average so far is much higher.
Raise the gas tax $.30, that’ll put a big dent in the shortfall.
Adjust annually based on the average price of gas for a preceding 12 month period.
I await the friendly comments from my fair and balanced friends.
Tim,
It appears that you want to cause serious inflation in the state of Minnesota. Raising the cost of energy, which is used to transport nearly everything we make and buy is economic suicide. All of you people who live in big cities and think that gas prices only affects people who commute are missing the big picture.
Why is it that every other state in this country has a gas tax that is about the same as Minnesota’s or a little higher and they can fund their roads and bridges? The proposal you’re making would make our state’s gas tax double every other state’s.
P.S. I’d like to know where you can buy gas in this state at $2.50 a gallon.
Oh, and by the way, when our gas tax rate was 20 cents a gallon in 1988, everyone else’s was much lower. How is it we fell behind in road construction when we were actually collecting more per gallon than other states?
Chris O’Reilly,
“Raising the cost of energy, which is used to transport nearly everything we make and buy is economic suicide.”
…but GAS PRICES have gone up enormously. Isn’t that economic suicide, Chris?
Yes, rising fuel prices is bad for the economy. But putting an additional artifical increase on top of the market driven increases is economic suicide. The states with the highest gas taxes in the U.S. are only a dime higher than Minnesota’s. The proposals here would blow our gas prices through the roof - especially compared to other states.
But Chris,
I see gas prices going up way over .20 in a couple of days REGULARLY.
Where’s the outrage?
Nitro,
You clearly know as much about economics and market forces as you know about bridge engineering.
Ahhh yes the market forces. LOLOLS.
These from 2005?
http://www.msnbc.msn.com/id/8646744/
http://abcnews.go.com/WNT/story?id=1029991
http://www.consumersunion.org/pub/core_other_issues/001541.html
Ahh yes the market forces that move money out of my pockets into the pockets of the elite who already have pawlenty, Bush’s base, those forces.
The market of greed and obsene salaries, the new “guilded age?”
I understand that completely. It is disgusting.
“Magic Market Forces”…
Is this something from Harry Potter?
Magic outside forces - in this elemental universe, that absolves the right from all cosequences?
There’s a good point to be had in Nitro pointing out the fluctuations of gas pries. We’ve apparently accepted around $2.75 as a new base level for gas prices, simply because its better than $3.
At some point the economy adapts, because it HAS to.
All except folk of modest means & my experience tells me the Republicans in office don’t care so much for THOSE people, in their ideology. They’re just speed bumps anyway.