By Rep. Paul Anderson
Many who were expecting Gov. Walz to call for a 10-cent increase in the state’s gas tax were a bit surprised at his announcement of a three-legged approach to increasing the state's transportation funding. Not only did the governor call for a 20-cent increase to the already 28.5 cents per gallon we already pay, he also advocated for an increase in license tab fees along with an bump in the sales tax we pay when buying a vehicle. Under the governor’s plan, the tax on car sales would increase from its current 6.5 percent up to the full rate which includes the Legacy Amendment addition. That would push the sales tax bite on vehicle purchases up to 6.875 percent.
The 70-percent jump in the gas tax is what garnered the most attention. It would put us on a fast track to moving up and having the fourth-highest gas tax in the nation. We are currently pretty well aligned with our neighboring states on the gas tax, but imagine what that kind of increase would do to buying habits in cities close to our borders. We have all been known to search high and low in an effort to save a penny or two on gas. A 20-cent difference across the river, for example, would be a very difficult thing for Minnesota stations to compete against. Our cigarette taxes already drive smokers across the border, and this would greatly amplify the retail pricing difference and, once again, make our state much less competitive.
In total, the governor’s budget proposal would increase taxes on Minnesotans by $3 billion. All that, despite having a fairly healthy surplus. We’ll find out more this week about our actual financial situation when the all-important February forecast in released. It was hoped that the surplus could be used to fund some of the increased spending proposals, in addition to providing badly needed tax relief. Now, some of the tax provisions Minnesotans want, such as Section 179 expensing and additional relief on school capital referendums, are not the sure things we envisioned just several weeks ago.
On another topic important to all residents, Gov. Walz indicated his support for a 20-percent subsidy for those buying health insurance on the individual market. However, he would eliminate our current reinsurance program, which has stabilized and actually lowered premiums in many cases. So, with the reinsurance program no longer helping to pay the largest claims, rates would likely increase once again. So, a 20 percent subsidy won’t look so good if the premium increase without reinsurance is larger than the subsidy itself.
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I mentioned last week that our renewable energy sources, in some cases, aren’t too dependable during Minnesota’s “theatre of seasons.” Well, many of our state’s rural electric cooperatives were at the Capitol last week meeting with their legislators, and reliability of the system during our recent polar vortex was a hot topic of discussion. A graph showed the electric generation of Great River Energy during those three extremely cold days back in January, from Tuesday the 29th through Thursday the 31st. The baseline generation by coal was steady all the way through those three days. Wind power, however, dropped off dramatically during the evening of the 29th when temps dropped to minus-30 and even lower. In fact, it was pretty much offline for the entire day on Wednesday and didn’t come back up until Thursday when temps moderated somewhat.
The graph also showed that auxiliary power, mainly gas turbines, ramped up when wind production dropped and played a large role in meeting the high demand during those days. It showed that we need a balanced portfolio when it comes to electric power, especially in regard to baseload generation.
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