Transportation funding clash sets up 2016 battles

Republicans and Democrats at the State Capitol appear to be headed for a crash on transportation funding.

Gov. Mark Dayton and Senate Democrats say Minnesota needs to raise taxes to pay for $10 billion worth of road, bridge and transit projects over the next 10 years.

House Republicans have been working on a plan that doesn't raise taxes but would dedicate the revenue from several existing taxes to fix road and bridges. But state Rep. Tim Kelly, chair of the House Transportation Committee, isn't ready to say how much it will cost.

Kelly, R-Red Wing, said his plan would use some money from the state's $1.9 billion budget surplus. He also wants to borrow some money, and dedicate a portion of existing tax revenue to transportation.

Those taxes may include the sales tax on auto parts as well as taxes on leased vehicles and rental cars, which together raise about $200 million a year.

Even though his plan spends much less than Dayton and Senate Democrats, Kelly said the Republican proposal is more popular, according to recent poll from KSTP-TV and Survey USA.

"The biggest difference, of course, is where the revenue is coming from," Kelly said. "As we lay out our plan, the state of Minnesota is going to help us out because we had a 75 percent approval on just our basic plan. When we see this, it's going to go 85 percent."

Democrats say Kelly's plan doesn't go far enough.

Senate Majority Leader Tom Bakk said he doesn't support dedicating tax revenue to transportation that now goes to the general fund. Bakk said using general fund revenue for transportation projects is a bad idea because lawmakers will always put a higher priority on education and health care than on roads and bridges.

"Those investments will always get delayed," said Bakk, DFL-Cook. "So the challenge of trying to craft a transportation bill that relies on general fund spending is we can cobble a budget together for this two-year budget cycle, but after the 2016 election, a new Legislature is going to come in here and they're going to have their own priorities."

Senate Democrats favor a gas tax hike of at least 16 cents a gallon and a Twin Cities-wide sales tax increase for transit.

Although Dayton has not immediately dismissed the Republican plan, the governor said he wants it to spend enough to improve transportation.

But during a Monday stop in Moorhead, Dayton didn't sound optimistic about the upcoming debate with House Republicans.

"For people who believe that no taxes is the pinnacle of public policy achievement, there's not much room for negotiation," Dayton said.

Without an agreement, the two parties are certain to battle over transportation in the 2016 campaign.

One House Democrat is proposing a compromise that relies on Kelly's proposal to dedicate some existing taxes and a gas tax and sales tax hike that doesn't raise as much as Dayton's plan.

State Rep. Ron Erhardt, DFL-Edina, said a transportation solution won't happen if the two parties don't cooperate. But Erhardt said he won't support any plan that only nibbles at the problem.

"I would think that if we don't do enough, then we ought to bypass doing anything," Erhardt said. "Because if you dribble a little money out there and it satisfies things for a year or two, it's not going to help what we really have to do."