EDITORIAL: Property tax, gas tax

The 2007 Citizen Compass Poll by the Minnesota Chamber of Commerce asked Minnesotans what they would do with the state’s surplus or extra money. It found 53 percent want property tax relief, 41 percent want more money for local school districts and 31 percent want poor people to have health-care coverage.
We agree – maybe because we live in rural Minnesota. A state report issued last week said outstate property taxes will go up 10.3 percent in 2008, while metro property taxes will go up 5 percent next year. When the state had its budget crisis in 2002 and 2003, large cuts to cities, counties and schools helped balance the budget.
Hutchinson lost $374,000 from 2002 to 2003 and $623,412 from the amount promised for 2003 and laid off 14 city workers. Hutchinson school district laid off 16 teachers. It was brutal. Now that more money is coming back into the state’s checkbook, a portion of it should go to schools, cities and counties. Since 2002, 90 percent of Minnesota’s school districts have asked voters for money just to operate.
Bolstering payments to schools, cities and counties can relieve future property tax increases. Direct property tax relief is also good, but cities, counties and schools should receive some of the surplus. Other big problems could use surplus money, too.
Gubernatorial candidate Peter Hutchinson was right during his campaign last year. He said spiraling health care costs are going to break Minnesota. But, if we can solve the crisis, cost savings could be substantial. Savings could remedy many of our other needs. The state needs to bring its new bipartisan government to bear on this problem.
For health care, roads and building a bigger rainy day fund for the next budget crisis, we don’t support a general tax increase. Taxpayers have been through a lot the past few years. But, there is one user tax increase we do support increasing.
Gas tax
Roads and congestion are at the top of the frustration and safety concerns for many drivers. And, 70 percent of Minnesota traffic deaths are in rural Minnesota. Fixing our roads will be an expensive, long job. Minnesota has fallen behind its road needs for two decades. Estimates needed to fix the problem range from $750 million to $2 billion per year for 10 years.
Republicans and Democrats agree the problem is great. Bills introduced in the Minnesota House and Senate, primarily by Democrats with some Republican support, call for a 10 cent per gallon gas tax increase. The higher gas tax would raise about $1 billion per year.
Many conservatives agree to a gas tax increase. The Minnesota Chamber of Commerce supports an increase up to 5 cents per gallon. Former House Speaker Steve Sviggum said he supported a gas tax increase last year. The Itasca Project, made up of CEOs of Minnesota’s biggest companies, said transportation investments are a top priority, and have lobbied since 2004 for an increase.
Minnesota’s gas tax is 22 cents per gallon. The average among all states is 27.4 cents. Wisconsin is the highest in the region with 32.9 cents. Gov. Tim Pawlenty said he would veto a gas tax increase, but might be hinting at some acceptable compromises.
While visiting Willmar two weeks ago, Mr. Pawlenty said he would support putting it on the ballot. Voters in McLeod County and across Minnesota strongly supported a transportation amendment last fall to give all taxes collected on motor vehicle sales to transportation. It will add $300 million to transportation when it is fully in effect in five years. Since support was so high for transportation last year, voters might accept a gas tax hike if they believe it will help.
Mr. Pawlenty also told the author of the bill in the House he likes a “tiered” system of gas taxes. The tax is raised or lowered depending upon the price of gas. Mr. Sviggum recommends adding some of the governor’s words to the bill to reduce its veto chances.
We support the Minnesota Chamber’s five cents per gallon increase. We could also support the 10 cents per gallon increase, but only if reverted to five cents after the extra transportation amendment money is fully collected in five years.
The gas tax is a user tax. People who use the roads pay for them. The amount collected is not paying enough to keep up. People who want to avoid paying the increase can drive less, or buy a car that uses less gas. Minnesota’s biggest businesses and its Chamber agree. The state should collect this tax at a level that can make Minnesota’s roads safe and efficient for travel.

Editorials are written by Publisher Matt McMillan and Editor Doug Hanneman. They can be reached at mcmillan@hutchinsonleader.com, or hanneman@hutchinsonleader.com.