Roads and the T Bill: Part 2

Correction and Update. Read below.

A system of roads must be funded. To buy a vehicle, we must pay a sales tax. To drive that vehicle legally on the road, we must pay a vehicle license tab fee. The driver of the vehicle must also be licensed. And the fuel that propels the vehicle is taxed, some of which goes to the state and some to the federal government. There are added fees for rental vehicles. The concept of a reasonable user fee is at home with Republicans.

These user fees fund our roads. The more we use the road, the more we pay. The more expensive a vehicle is, the higher is the sales tax and license tab cost. This does not necessarily translate into more use of the highway, so the progressive taxation idea is built into these taxes to hit the higher income earners more. The recently passed T bill increased all these fees.

The money collected is distributed by law. Phil Krinkie describes the arrangement in Minnesota. Krinkie says, "It started in 1920 with a Constitutional amendment to establish the state trunk highway system." (See MN Constitution, Article XIV, Section 2.)

Krinkie continues, ". . . in 1924 there was a Constitutional amendment passed to dedicate the excise tax on motor fuel (gas tax) to the trunk highway fund." (See MN Constitution, Article XIV, Section 10.)

"As the years passed," says Krinkie, "cities and counties wanted more state money for roads and bridges, so in 1954 another constitutional amendment was forwarded to guarantee cities and counties would receive a share of the state gas tax revenue with a defined split of 62% for the state, 29% for the counties and 9% for the cites." (See MN Constitution, Article XIV, Section 5.)

"Lastly, after a 20 year tug of war in the Legislature over whether the sales tax on vehicles should be spent on roads verses [sic] general state needs, yet another constitutional amendment was passed in 2006 to spend at least 40% of the sales tax on vehicles for transit and not more than 60% on roads." (See MN Constitution, Article XIV, Sections 12 & 13.)

These constitutional amendments govern how the collected taxes are distributed. After 55 years, is the set-in-stone split of the gas tax fair? Cities under a population of 5,000 do not receive a share (See MN Constitution, Article XIV, Section 4). Neither do townships benefit. These local roads are funded through property taxes and not gas taxes even though we small town locals pay the gas tax to drive on them. How is this fair?

Now that hybrid cars are traveling our roads, another adjustment must be made. While using the highways, the hybrid car does not pay its fair share because it is not paying as much gas tax.

Correction and update on April 16, 2008: A person added a comment to this post, indicating I had my facts wrong. In the following paragraphs, what I said about the gas tax, I should have said about the vehicle sales tax. I have corrected this by striking out the word gas and adding "vehicle sales" in blue. The point of my comments is still valid.

But the most aggravation has been caused by the legislature using collected gas vehicle sales taxes to support the general fund. Not all gas vehicle sales taxes went into roads and bridges. Funding for roads and bridges was more than adequate for years with the excess monies funding other projects in the general fund. The state did not need to raise the gas tax because there was excess. However, there was agitation to dedicate gas vehicle sales money to roads and bridges, which was not being done.

The legislature set out to correct this, to dedicate all the collected gas vehicle sales tax so none of it would be dumped into the general fund. That was a noble thought. However, with the latest amendment, roads and bridges came out on the short end. Instead of all gas vehicle sales tax revenue being dedicated to roads and bridges, a new category, mass transit, was invented. Now, by constitutional amendment, at least 40% of the gas vehicle sales tax revenue must be spent annually on mass transit. Roads and bridges receive not more than 60% and it could be less. There is not a shortage of gas vehicle sales tax revenue to pay for our roads and bridges. We did not need to raise the gas tax. There was plenty of money.

But, instead of dedicating it all to maintaining roads and bridges, we added a whole new category of consumption. Now mass transit consumes almost half of the revenue. How is it fair for the bulk of our state gas vehicle sales tax payers to fund a train they will never use? How is it fair that cities under 5,000 and townships do not receive gas tax revenue for their roads, but they must pay for a train?

Meanwhile, the Dems have been howling that they must have more money to repair and replace dangerous bridges. What a joke! There has been adequate money all along, even excess to use in the general fund. And then the Dems set out to divert gas vehicle sales tax revenue for a boondoggle called mass transit. Of the 5¢ per gallon gas tax increase scheduled for 2008, 2¢ of it must go into mass transit. Only 3¢ goes into roads and bridges. Of the sales tax we pay for a vehicle, 40% funds mass transit. And yes that amendment was passed by the voters under a Republican administration. There also was great confusion among voters about the wording of that proposed amendment on the ballot and I have heard many people who voted for it state their regrets. Here is a link about the constitutional amendment. A mere 7 point vote swing and the amendment would not have passed.

These are the issues that disgust conservatives. If the Dems must have a train or two or three, let the users pay for it, just like we users pay for roads and bridges. Transit riders will never pay for the cost of transit. The annual transit deficit must be funded from the general fund to cover costs. Thus vehicle drivers end up paying twice for transit–once through gas vehicle sales taxes and then through the general fund.

Is the gas tax solely dedicated to roads and bridges? Not according to this web site. Look here for their complaints.