Just how much Minnesotans will pay in higher taxes and fees under the new transportation funding package depends on where they live, how much they spend, how far they drive and what kind of vehicles they own.
No free ride in quest for better roads
How much transportation taxes will cost depends on who you are -- and who you ask.
A Carver County woman who earns $75,000 a year and drives 15,000 miles in a mid-sized car, for example, would pay an extra $103 a year in sales and gas taxes when the transportation package becomes fully effective.
That's assuming that her car gets 22 miles to the gallon and that her county board approves the sales tax increase authorized by the Legislature.
Meanwhile, a Scott County woman with roughly the same income, who drives 30,000 miles a year in an SUV that gets 14 miles to the gallon, would pay an extra $227 annually.
And if she replaced the SUV with a new one worth $33,000, she'd pay nearly $200 more the first year she renewed the registration, and an extra $1,000 over 10 years.
But if the woman bought a new Honda Civic, she would see a slight reduction in registration fees.
In overriding Gov. Tim Pawlenty's veto of the transportation package, the Legislature this week set the stage for a series of tax increases intended to generate $6.6 billion to fix, maintain and expand highways, roads and transit.
The gasoline tax will rise 8.5 cents between now and 2012 for highway, road and bridge work. It will increase 2 cents on April 1, by another .5 cents in mid-summer, and by an additional 3 cents by Oct. 1, with the remaining 3 cents phased in gradually over the next few years; 3.5 of the 8.5 cents will pay for nearly $2 billion in bonds.
The sales tax increase is optional. The seven counties in the Twin Cities metro area -- Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington -- can raise it by .25 percent with the approval of county boards. At least two counties must approve joining a metropolitan transportation region by Oct. 2 before the increase can go into effect.
Outstate Minnesota counties can raise their sales taxes by one-half a percentage point, but need referendums to do it.
Disagreement on impact
The Department of Revenue recently analyzed the potential effect of the metro-area sales tax hike, and the impact of the gas tax increase can be calculated by miles driven and the fuel efficiency of specific vehicles.
However, Republicans and DFLers disagree on the impact of those changes and of higher vehicle registration fees on taxpayers.
DFLers emphasized that moderate income people who drive fuel-efficient cars about 15,000 miles a year and seldom buy new cars would feel little adverse impact. They produced examples of registration fees for newly bought low- and moderately priced cars that would either decline slightly or increase up to $500 across 10 years. Under the legislation, people will not pay increased registration fees on vehicles they already own, only on purchases of new cars and of used cars not registered in Minnesota.
Rep. Frank Hornstein, DFL-Minneapolis, said the gas tax and vehicle fees could mean a reduction in property taxes that some cities have used to repair local roads in years when state transportation funding was inadequate.
He said higher gas taxes and registration fees for more expensive and larger vehicles could encourage people to buy more fuel-efficient vehicles, "which will save families money."
But Republicans stressed that families who drive long distances in larger vehicles would be hit harder.
As an example, they said a family of four in Bemidji could see its total taxes increase as much as $373 per year, assuming that the family bought a 9-year-old car and a 1-year-old SUV and drove more than 35,000 miles a year. The SUV in the example gets 17 miles per gallon, and the car gets 22.
For a family of four with a $71,032 income living in Woodbury, Republicans said the increase would be $378 annually. The computation was based on the family having a car, an SUV and a minivan, party officials said. Republicans said they based their calculation on the family driving 24,402 miles a year and paying the increased sales tax.
Public misled, both sides say
House Minority Leader Marty Seifert, R-Marshall, said DFL claims that the legislation might invite a property tax decrease were misleading because the bill did not require local governments to lower their taxes.
At his second media conference in two days since the override of his veto, Pawlenty was again critical of the DFL-sponsored legislation. "You can mark the calendar," the governor said. "[Monday] will be the day that began a tax revolt in Minnesota."
The governor stood beside a mockup of a service station sign, showing that a gallon of gas costing $3.04 will rise to almost $3.13 under the new law.
"I am not happy about this," said Pawlenty. "I think taxpayers in Minnesota had a bad day," he said of the veto override.
"They're not stupid. They know they just got dumped on."
Rep. Jim Abeler, R-Anoka, one of six House Republicans who voted for the legislation, said many Minnesotans were misinformed about the magnitude of the tax increases, or didn't realize that the gas tax hikes would be phased in. "[I tell them] it starts at 2 cents. They go, 'Really?' " he said. "It's a lousy time for a tax, but it's a good time for a solution" to Minnesota's transportation problems.
mkaszuba@startribune.com 651-222-1673 pdoyle@startribune.com 651-222-1210
Our mission this election cycle is to provide the facts and context you need. Here’s how we’ll do that.