Whoa, a gas tax increase…. just what we need, or maybe not

H.F. No. 2800, 4th Engrossment – 85th Legislative Session 2007-2008

Initially, when I first heard of this, it was like whoa… a gas tax increase with the economy taking a header, not cool. But alas, in politics as in other aspects of life, whats on the surface is often times not the whole story. Thus, it was time to do some digging.

Well, first I come to find out, this is the first time the gas tax has increased since 1988.. and that makes me go hmmm. A quick run over to the Federal Reserve’s CPI calculator makes for an interesting analysis. 20 cents in 1988 equates to 36 cents in 2008. Granted, the CPI is a bit broad, but if we look at the cost of fuel, vs the cost of construction, its probably a reasonable calculation. Thus, in looking at the last 20 years, the MN legislature should have acted way before now. Secondly, with October’s 28 cent gas tax, it ends up being 8 cents less than it would have been in 1988 dollars. Now, I wouldn’t go so far and play the game that the legislature came up with a tax decrease, but it is interesting to note the difference in the value of a dollar over time.

The next thing I did, was run some numbers, to see how the tax increase would impact me in a worst case scenario. One of my highest mileage years ended up being upwards of 43000 miles traveled. And being my vehicle is not super great on gas mileage,  that works out to about $140 as a fuel cost increase. However… thats not the full story by any means. Poorly maintained roads raise havoc from a preventative maintenance standpoint. Suspension parts and tires take a major hit in life span, but also vibration can lead to failure of other parts.

Being I have over 12 years of historical data on my car, as well as road conditions, I’m able to hazard a more quantitative guess than most. (still a lot of hand waving though, as road condition is quite subjective, without onboard datalogging and vibration sensors…. and component life span can be affected by a multitude of non-road related factors) Ultimately, I found that poorly maintained roads ended up on average increasing my maintenance costs roughly $37 a year. Yet, it should be noted that I do all maintenance work myself, thus that figure is probably two or three times greater if one were to use a commercial garage or perhaps even more at a dealership.

Then there is the aspect of safety and comfort while driving. No one likes to be riding on a buckboard as it can be pretty fatiguing, but there is also a safety factor to be considered. One trip into a corn field is a ton more expensive than even a few years of this tax increase.

And of course, the last thing is a detailed read of the bill itself, and a few things came to mind as good calls. First as concerns transfers, I know this was an issue some years back, where in there was a push to take from the airport fund and transfer it to the general budget. I think, as the bill reads, that effort was thwarted, and it is one I agree with. Aircraft fuel tax should be used to fund airport ops, not everything else under the sun, especially since airport funding is pretty tight, and aviation is already a huge source of general tax revenue.

Lastly there is a provision for a low income tax credit to offset the financial aspects of this tax. While the amount of the credit is pretty low,  to add more tax to the less fortunate for the benefit of the masses is not cool, and this credit mitigates that a bit.

This, I think the legislature made the right call on this one, although ideally they would have passed such a tax increase when the economy was good and fuel was much cheaper, and this coming from a guy who dislikes tax increases as a general principle.

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