2023-24 session outcomes: Transportation

The Legislature provided significant, ongoing increases in annual funding for our transportation infrastructure this session – totaling $3.8 billion in just the next four years – roughly $1 billion per year. While the Chamber has long-advocated for increased investment in our transportation system, it’s disappointing that the Legislature chose to make these investments largely through increased taxes and fees. With a nearly $18 billion surplus at its disposal, the resources were available to make needed investments without raising taxes. Instead, Minnesotans will pay more to register, purchase and fuel up their vehicles, and they’ll pay more when they make purchases in the metro or online.

Transportation taxes and fees:

• The metro area sales tax increased by .75% in October, 2023. 83% of the funds derived from this increase will benefit the Met Council.
• Drivers will also see tab fees increase.
• The motor vehicle sales tax also increased from 6.5% to 6.85%. This took effect January 1, 2024.
• Beginning in August 2023, the gas tax increased each year automatically, based on inflation. It’s expected to increase by as much as 3 cents on January 1, 2024, and it’ll continue to increase automatically every year thereafter.
• Minnesota also joined Colorado as the only state to levy an extra tax on online purchases. Beginning July 1, 2024 any non-food purchase over $100 that’s made online and that’s delivered to your door are subject to an additional $0.50 fee.

Dedicating auto parts sales: For years, the Chamber and its partners advocated for the state to dedicate the proceeds from auto part sales to transportation funding. Thanks to legislation passed this year, 100% of the receipts from this sales tax will be used to support transportation infrastructure. While this is a long-term win for much-needed funds, lawmakers also decided to phase in this plan over 10 years, which stands in stark contrast to the many transportation tax and fee increases that are set to take effect in the coming months.

State and local matching funds: The final transportation bill included full funding for the state and local communities to match and draw down federal funds available through the federal Infrastructure Investment and Jobs Act (IIJA). The bill also established the position of IIJA coordinator, offering a state agency lead for activities related to federal funding opportunities available to the state and local communities for infrastructure.

WATCH: 2023 Statewide Policy Tour discussion on transportation
 

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