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Governor Walz’s FY 2020-21 transportation proposal increases gas tax and other revenues to pay for Minnesota’s roads and transit

Clark Goldenrod
Apr 09, 2019

Governor Tim Walz’s FY 2020-21 budget proposal includes a substantial transportation component. Minnesotans count on their roadways to get to work, school, or community events, and no matter how they get there – whether by bus, car, or bike – having roads in good condition make that trip quicker and safer. His recently released supplemental budget makes some small changes to his original proposal but largely follows the same policies and principles.

Through the governor’s budget proposal, he expects to:

  • Modernize the state’s roads and bridge system;
  • Make investments in programs like MnPASS; and
  • Improve travel on “key corridors” throughout the state and within our state’s cities and towns.

The Department will also use the funding to address snow and ice maintenance on the roads, repair potholes, inspect and maintain bridges, and build a safer transportation system. Transit investments include funding for Metro Mobility, which serves Minnesotans living with disabilities. The funding would also help improve bus service and build out rapid transit lines.

The Minnesota Statewide Highway Investment Plan found that Minnesota needs an additional $6 billion over the next 10 years for the state’s roads. In response, Walz proposes a few funding mechanisms to meet this need. The centerpiece is increasing the gas tax, which has lost about one-third of its buying power since 2000. Walz proposes raising the tax by 20 cents in steps over two years, and then indexing it to inflation starting FY 2023 so that it can keep up with the state’s transportation needs.

In addition, the governor proposes:

  • Increasing the vehicle registration tax;
  • Increasing the motor vehicle sales tax rate from 6.5 to 6.875 percent;
  • Authorizing new trunk highway bonds totaling $2 billion over eight years; and
  • Enacting a 1/8 cent sales tax in the seven-county metro area for transit.

In addition to increasing investment in transportation and transit, the increases in dedicated transportation funding allow the governor to end the recent practice of diverting certain sales tax revenues from the general fund to transportation. This would put about $460 million back in the general fund in FY 2020-21, where it funds investments including in education and community vitality.

-Clark Goldenrod