Minnesota Chamber Of Commerce Proposes Alternative Transportation Funding Mechanism

The organization is asking the Legislature to consider a “value capture user fee,” essentially a property tax increase on properties whose value would be enhanced by transportation improvements.

Republicans in the Legislature and state business leaders aren’t even taking Gov. Mark Dayton’s transportation proposal out for a test spin before declaring it unacceptable.
 
But state business leaders do have a tax increase proposal of their own. 
 
Dayton’s plan calls for a 6.5 percent per gallon tax on gas at the wholesale level, an increase in license tab fees and registration fees, and a half cent sales tax increase in the seven-county metro area. 
 
The response from Senate minority leader David Hann: “The Legislature should take the time to adequately define our transportation needs, and then come up with solutions that actually address it, without raising taxes.”
 
Legislative Republicans and the Minnesota Chamber of Commerce support plans to use general fund revenues and wring efficiencies out of the current system, a proposal that critics say would fall far short of the $6 billion the state will need over the next ten years.
 
But the state Chamber of Commerce isn’t entirely opposed to raising taxes to fund transportation. It’s asking the Legislature to consider a “value capture user fee,” essentially a property tax increase on properties that would be enhanced by transportation improvements.
 
“Think of it as a special assessment,” said Bill Blazar, the Minnesota Chamber’s acting president. “You would have to show that public improvement has raised the value of the property so it’s a benefit test, not speculation.”
 

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Blazar said there’s a number of legislators, both DFL-ers and Republicans, that “at a minimum see the need to look at the alternatives.”
 
In 2008, the last time gas tax was raised, the Minnesota Chamber was one of the major players in what eventually turned out to be a 8.5-cent gas tax increase. The Chamber even supported the override of Gov. Tim Pawlenty’s veto.
 
That was then. “In the last seven years, I think the way we use the transportation system has changed fundamentally,” Blazar said. “Just the number of people who work at home.  Secondly, the technological changes — the most prominent is the electric vehicle — and then, third, the fact that you had such a big tax increase in 2013.”   
 
Move Minnesota, a coalition of labor and interest groups, supports the governor’s plan. “A great first step,” is how spokesman Darin Broton describes it. 
Broton predicts movement on either raising the sales tax on fuel or a simple percent per gallon tax increase. Unlike Blazar, he sees similarities between 2008 and 2015. “This [opposition to gas tax increase] is how the chamber positioned itself in 2008. They didn’t come in until the last minute to support the override,” he said. “What else is sort of similar, a number of regional chambers have been pushing for new revenue.”
 
Blazar contends the new revenue is there in the value capture user fee. “We’re optimistic that value capture or something like will be part of the final legislation.”