Efforts to put a constitutional amendment on the November ballot to permanently dedicate the sales tax on auto parts and auto rental taxes to roads and bridges has passed key committees in the House and Senate.
MREA opposes this misleading amendment because it would lead to dollars moving from the state’s General Fund to being completed dedicated for transportation.
About the Amendment
Two bills, HF 4437, authored by House Transportation Finance Committee Chair Paul Torkelson (R-Hanska), and SF 3837, authored by Senate Transportation Committee Chair Scott Newman (R-Hutchinson), have cleared their respective Transportation committees, and SF 3837 was moved to Senate Taxes.
Both create a new Road and Bridge Fund in the Minnesota Constitution with revenue from the sales tax on motor vehicle repair and replacement parts and rental vehicles. The bills are not identical so will need to be conferenced should they pass their respective bodies.
The House version is phased in over six years. When fully phased in, the House version would divert $363 million annually from the General Fund into this Road and Bridge Fund. This is about the cost of 2% and 2% on the education formula.
Transportation already has constitutionally dedicated funding (gas taxes and registration fees) and by statute, auto rental sales and excise taxes, and 54 percent of auto parts. The proposed constitutional amendment would permanently dedicate those to roads and bridges including 100 percent of auto parts sales tax. Learn more
MREA and educational organizations AMSD and MASA, as well as 15 other organizations including the Coalition of Greater Minnesota Cities, testified in opposition to this constitutional amendment last week in the House Transportation committee.
MREA Executive Fred Nolan’s testimony in opposition emphasized how rural schools are dependent on the education formula, which requires a healthy general fund.
When the general fund is healthy, schools have received inflationary increases of 2%. When the general fund is in trouble, schools see zero and fall behind. This proposed constitutional amendment will have the effect of permanently depressing the general fund and put rural schools at risk.
In the 7-county metro area, operating referendum revenue (including LOR) per pupil is 72 percent greater than for rural students: a $685 per pupil difference. Rural schools start $685 on average behind our metro counterparts and have significantly less household income and property value to seek local funding to make up the difference.
Transportation has options to increase funding from its constitutionally dedicated funding streams. Advocates of this amendment are choosing not to do that.
Rural Minnesota needs good roads and good education to thrive, but we don’t get there in the long run by robbing one to pay the other.