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Dayton willing to drop gas tax plan, but increase tab costs

ST. PAUL -- Minnesotans likely will pay higher vehicle license fees if the governor and lawmakers reach a transportation funding deal this year. Passing a funding bill is a big "if" after Democratic Gov. Mark Dayton Monday offered two transportat...

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Minnesota Gov. Mark Dayton drives home a point Monday as he introduces a transportation funding compromise that includes higher license tab fees. Don Davis/Forum News Service

ST. PAUL - Minnesotans likely will pay higher vehicle license fees if the governor and lawmakers reach a transportation funding deal this year.

Passing a funding bill is a big “if” after Democratic Gov. Mark Dayton Monday offered two transportation funding plans that he called compromises, both with higher tab fees and both rejected by the Legislature’s top Republican as being too heavy on taxes. One of his plans dropped a proposed 16-cent-a-gallon gasoline tax increase to a nickel and the other eliminated a new gas tax.
Dayton said he is flexible as to specifics, but not on the need to spend $600 million a year for a decade to bring state roads up to standards.
“I am not willing to settle for less,” Dayton said.
While House Speaker Kurt Daudt, R-Crown, said he was happy that one of Dayton’s plans dropped the proposed gas tax increase, he said the tab hike is just another tax increase.
“It’s tough to say you’re going to double the amount that people are paying for their license tabs,” Daudt said.
Under the Dayton proposal that does not have a gas tax increase, tab fees on a $30,000 vehicle that now are $385 would rise to $509 in the first year and from $35 to $55 after 10 years.
Senate Majority Leader Tom Bakk, D-Cook, said the tab increase “so far is higher than the Senate has been willing to go.”
Bakk said Senate Democrats prefer a gasoline sales tax increase, even though Daudt and other Republicans say they can support no new gas tax.
The majority leader made no promises that transportation funding will go up. “I am not sure we are going to get there.”

Bakk and Dayton suggested to “set aside the transportation conversation right now” after the governor and Daudt said last week a transportation deal needs to come before other issues can be settled.
While no new negotiations were planned among Dayton and legislative leaders, the governor said “I am available all week” to discuss transportation, public works funding, the budget, tax cuts and “anything else.”
The Legislature must finish passing bills before its May 23 mandatory adjournment date.
Dayton said Republican plans to move $300 million from other state programs is too much, but he did agree to allow $200 million be transferred.
The governor said state leaders have not kept up with transportation needs for the past 20 years.
“The system has continued to get older and the use of the system has increased,” Dayton said.
Dayton said the public wants politicians to fund transportation needs.
The governor’s original plan would have raised about $600 million a year, mostly by the gas tax, but he also included a smaller tab fee increase than what he now suggests. His new plan without a gas tax increase calls for $400 million in new tab fees and $200 million taken from other state programs funded by general taxes.
Senate Democrats would increase tab fees $180 million, but take no money from other programs. They also seek a 12-cent-a-gallon gas tax increase.
House Republicans want to transfer $300 million annually.
The Dayton administration and Senate Democrats say they would borrow some money, but their plans do not specify how much. The House plans to borrow about $300 million for transportation.
While the House and Dayton look for $600 million a year in new transportation money a year, the Senate plan would be nearly $1 billion.

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