Motor vehicle repair and replacement parts taxes

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The Senate heard a bill that would statutorily divert motor vehicle repair and replacement parts tax revenue from the general fund to the dedicated Road and Bridge Fund. The bill would require Minnesota Management and Budget (MMB) to move $300 million from the general fund on July 15, 2018 to the Highway User Tax Distribution Fund. In each subsequent year on July 15, MMB would move tax revenue generated from auto repairs and parts to the roads and bridges account.

This proposal is a shift masked as a solution to the transportation funding problem. On one hand, this would add significant revenues to roads and bridges, but it would cause a structural budget imbalance in the general fund, likely necessitating cuts to other vital programs like our kids’ schools, or taking care of our most vulnerable, or reducing investments into our higher education systems, or any other programs funded through the state’s general fund. Another issue with this idea is the funds are not constitutionally dedicated, so the next time there is a financial crunch a future legislature can raid these funds to fill a budget gap leaving our roads and bridges in disrepair. (SF 990)

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