Minnesota considering gas tax hike

Minnesota is considering increasing the amount of money drivers in their state will have to pay at the pump to help pay for transportation projects, the Minneapolis Star-Tribune reports. 

The state Senate has approved legislation that would increase the state’s gas tax by 16 cents, according to the report. The paper said the new tax would be known as a “gross receipts tax” and would be collected on top of the state’s existing 28.5-cents-per-gallon gas tax.  

The new Minnesota fuel levy will be collected on top of an 18.4-cents-per-gallon federal gas tax that is charged to all drivers in the nation to fill the federal government’s transportation funding coffers. 

{mosads}The American Petroleum Institute says the gas tax increase will bring the total amount of money that drivers in Minnesota are charged at the pump to 63 cents per gallon. 

The state is the latest to consider increasing its gas tax in recent years as federal transportation funding has dried up. 

Lawmakers in Congress are currently facing a May 31 deadline for the expiration of federal transportation funding, and they are struggling to come up with a way to pay for an extension of the measure. 

Transportation advocates in Washington have pointed to the willingness of states like Minnesota to raise their own gas tax as evidence that a national hike would be politically palatable this year. 

Conservative groups in Washington have made clear that they would consider an increase in the federal fuel levy a tax hike, however.

House Majority Leader Kevin McCarthy (R-Calif.) said on Tuesday that a gas tax hike is dead on arrival in Congress, even as lawmakers are scrambling to come up with a way to pay for a new round of transportation spending. 

“I think passing a gas tax is politically impossible,” he said, pointing out that he just paid $3.20 a gallon to fill up his car in his hometown of Bakersfield, Calif.

The gas tax has been the traditional source of transportation funding since its inception in the 1930s. The tax has not been increased since 1993, however, and improvements in auto fuel efficiency have sapped its purchasing power. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually at its current rate. 

Lawmakers have turned to other areas of the federal budget in recent years to close the $16 billion per year gap, but transportation advocates have said the resulting temporary funding measures are preventing states from completing large construction projects.