The transportation conference committee will meet late this afternoon to try to reconcile the differences between the $7 billion House Republican plan and the $11 billion Senate Democrat plan to help fund Minnesota’s transportation needs over the next two years.
Yesterday, Senate Majority Leader Tom Bakk, D-Cook, stated that he’d be willing to forgo the Senate transportation funding bill containing the 16 cent per gallon gas tax hike and 1 cent metro sales tax hike if Speaker Kurt Daudt, R-Crown, would be willing to forgo $2 billion in tax relief provided in the House tax bill leaving a status quo for Minnesotans.
Negotiations between the stogie-smoking duo could very well be very simple. Bakk is a former union negotiator, Daudt a former car salesman. The details of a transportation and a tax bill will be left to their committee chairs. The overall budget number along with numbers for tax hikes and tax relief are what’s on the table.
Gas and sales taxes are strictly regressive, something that Democrats say they don’t want. Bakk and the Democrats want the bulk of the $1.9 billion budget surplus spent and see the gas tax chip is the way to get there.
Back in January Bakk’s fellow Iron Range Democrat, Rep Tom Anzelc, D-Balsam Township, indicated the politics of the negotiation, telling the Mesabi Daily News “I’ll support an increase in the state gas tax in the House if the Republican majority puts up half the votes. I won’t support it with 95 percent Democrats supporting it and only a handful of Republicans..”
A recent Star Tribune poll showed that 3 out of 5 Minnesotans-– who live outside Hennepin and Ramsey counties– are opposed to the Democrat’s transportation plan to spend $11 Billion and raise taxes. Without rural Democrat support, it would be impossible for the 6.5% hike to pass the House. Daudt would have to serve up at least six House Republican votes and the last time six Republicans voted for a gas tax hike in 2008, four didn’t return to St. Paul after election day. One that did return, Rep Rod Hamilton, R-Mountain Lake, currently serves as chair of the House agriculture committee. The other, Jim Abeler, is now a lobbyist.
Could Bakk get a smaller gas tax hike out of Daudt’s Republicans? It’s remotely possible. Daudt was the former campaign manager and close friend of former House Minority Leader Marty Seifert who is now lobbying for a highway partnership that advocates a gas tax hike and multiple Chambers of Commerce now support the idea.
Before news of a big budget surplus hit, Daudt was open to the idea of a gas tax hike telling the Star Tribune on January 6th that “a gas tax is not off the table.” In early February, when a $1 billion budget surplus was projected, Daudt moved to a different line stating ,”Knowing it took 10 years to pass 5 cents, thinking that it’s going to take a few months to pass 16 cents is unrealistic. And the public obviously is not ready for that sort of thing.” When news of the $1.9 billion surplus came at the end of February, Daudt stated “I think this surplus means Democrats can stop talking about a gas tax in St. Paul.” By the end of March Daudt proclaimed at a press conference “we’re siding with Minnesotans on the gas tax” and took the idea off the table.
Framing a budget deal around the DFL’s eagerness to raise taxes with a massive budget surplus could play in the Republicans’ favor. Daudt has public opinion on his side with 38% of Minnesotans wanting the surplus returned to the taxpayers and less than 20% wanting the money spent to expand services, though 57% of Minnesotans said the surplus should be returned proportionally to the income tax paid verses only 9% who support the Daudt plan that gives the money to help certain groups via targeted tax credits.
While the House drives the overall budget, Republicans have to get the buy-in of a Senate with a sizable DFL-majority and a liberal legacy-seeking Governor. The Democrat leadership’s appetite for tax hikes seems to be whetted by a large state surplus comprised of income tax hikes enacted when they controlled the House, Senate, and Governor’s office in 2013. Although they lost the House due to that overreach, they know they’ll have Dayton in control through 2018.
Politically, Bakk and Dayton have little to lose while Daudt’s political future could be negatively impacted for delivering a budget well over $40 billion with any tax hikes. The Democrats seem to be relying on the 2011 tactic of being willing to shut down the government, something they believe will be blamed once again on the Republicans. If Daudt pulls tax relief for the sake of ending the session on time, the public may wonder, whatever happened to “Give it Back?”
