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Let's Not Erode Minnesota's User Pays Transportation Model

July 21, 2010 By Conrad deFiebre, Transportation Fellow
One of Minnesota's public strengths is a fuel tax that is as near to a pure user fee for roads and bridges as you will find anywhere in the United States. That's not the case in many other places. In neighboring Wisconsin, for example, there's now heated debate over diverting some of the state's 30.9 cents-per-gallon gasoline levy to general fund budget-balancing. At the federal level, nearly one-fifth of the 18.4-cent gas tax goes to transit and other off-highway means of conveyance.

That isn't supposed to happen in Minnesota, where the state constitution requires that the tax on "any means or substance used for propelling vehicles on the public highways" goes "solely for highway purposes." That means no gas tax funding for transit or welfare or practically anything else.

For decades following its enactment in the 1920s, this lockbox for highway money served Minnesotans well, building extensive state, county and city road systems that played a big role in our above-average prosperity. When inflation sapped the buying power of the per-gallon levy, legislators and governors regularly increased the rate, amid little controversy.

The public supported these hikes - 12 of them in Minnesota from 1925 to 1988 -- confident that the tax was going to better roads and bridges. Meanwhile, no less a tax-cutter than Ronald Reagan signed off on more than doubling the federal gas levy in 1983, from 4 cents to 9, along with the first diversion of a penny a gallon to transit.

"More efficient roads mean lower transportation costs for the many products and goods that make our abundant way of life possible," Reagan said in urging the increase (No, he wasn't pushed into it by Tip O'Neill and Congress). "So what we're proposing is to add the equivalent of 5 cents per gallon to the existing highway user fee, the gas tax. The cost to the average motorist will be small, but the benefit to our transportation system will be immense."

How times change! Now you'll never hear such sensible talk from conservatives for fear of excommunication from the no-new-taxes-no-matter-what crowd. Even President Obama has sworn not to raise the federal gas tax, stuck in neutral since 1993 and worth barely half what it was then. Instead, he and Congress have shored up highway finances with billions in non-user revenues.

This bodes ill for a longtime user-fee system that faces challenges on other fronts as well. Improving fuel efficiency and reduced driving have already cut into fuel tax collections on all government levels, and the imminent rise of electric vehicles will offer motorists a tax loophole big enough to drive a Hummer through (probably on really bad roads).

Against this bleak outlook, there's a new proposal that would return up to $18.5 million a year in Minnesota gas taxes - less than 2.5 percent of the total -- to highway purposes from their longtime transfer to off-road recreation programs. I'm all for more money for the roads, but not if it means more weakening of the user-pays principle for transportation finance. That could be the case here.

Minnesotans for Responsible Recreation (MRR), a Duluth-based environmental advocacy group, has called for stripping Department of Natural Resources funds for motorboats, snowmobiles, all-terrain vehicles, dirt-bike motorcycles and off-road trucks.

More than half that money goes to waterways management and facilities, another big chunk is for the state's 21,000 miles of seasonal snowmobile trails and a 0.48 percent sliver is divided among the other off-road modes. These percentages are based on the state's estimates of the amounts of fuel burned for each form of motorized recreation.

As such, this is meant to uphold the user-pays principle of fuel taxes. If ATVs, for example, aren't ridden on the roads, the tax on the fuel they consume should rightly go to their designated trails, about 2,000 miles of them in Minnesota. The problem, MRR contends, is that much of the time ATVs, dirt bikes, 4x4s and snowmobiles use highway ditches bought and maintained with road money, and when they go off-road, they seldom stick to the trails, degrading the wilderness.

Although Minnesota laws are lax in this area - specifically allowing off-road vehicles on highway right-of-way and practically all state lands -- the evidence for where the machines actually go is largely anecdotal. DNR acknowledges that roadways get some "off-road" traffic, but the agency maintains that off-trail riding has virtually disappeared in recent years - thanks in part to enforcement financed by off-road fuel taxes.

And MRR's argument breaks down completely when it comes to motorboats, which aren't propelled on the roads and account for at least $180 million of the $350 million that the group says have been siphoned from gas taxes over the years. Still, MRR raises worthwhile questions over weak accountability for the remaining off-road money, much of which is granted to private riding clubs, and the reliability of state fuel-use surveys that underpin the funding formulas.

State legislative auditors also voiced these concerns in a 2003 report that suggested snowmobiles, dirt bikes and 4x4s were overfunded by the formulas and ATVs underfunded. But the response from policymakers was guaranteed not to raise any off-roaders' hackles. They nearly doubled the ATV money stream and kept the other vehicles the same.

This is hardly surprising, considering the riders' lobbying clout that may exceed their numbers. Some recent informal polling, however, indicates little general public support for gas tax money going to motorized recreation. If off-roaders want to continue to benefit from Minnesota's admirable user-pays system of fuel taxation, they'd best not overreach either the share of money they're entitled to or the real estate they ride on.

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