Debate Over Minnesota transportation funding is heading up.

CHICAGO – Minnesota's Republican leaders laid out their cards on transportation spending this week, but they remain in conflict with Gov. Mark Dayton's proposal.

The House's GOP majority unveiled a $6 billion, 10–year program on Tuesday. It followed the Senate Republicans' release on Monday of a $3.6 billion, 10-year plan.

Both plans rely on diverting existing revenues and borrowing. Neither includes a gasoline tax or vehicle registration fee hike as Dayton, a member of the Democratic-Farmer-Labor Party, supports.

The House plan relies on $1 billion of general fund-backed trunk highway borrowing, another $200 million in annual general obligation bond borrowing, the use of automobile related sales taxes that flow to the general fund, and revenue from a $75 surcharge that would be imposed on electric vehicles. About $2 billion would be spent in the next biennium that begins July 1.

The GOP Senate plan would also divert automobile-related fees and taxes that go into the general fund and authorize new borrowing, although at more modest levels than the House plan. It provides about $1.3 billion more in the next biennium.

"Minnesotans know we can fund our priorities, including road and bridge infrastructure, without a harmful gas tax increase," said Rep. Paul Torkelson, R-Hanska, chairman of the House Transportation Finance Committee. "I believe this is a substantial and appropriate proposal."

DFL members slammed the House plan for failing to provide sufficient funding for transit and its reliance on the general fund and criticized the Senate plan for its revenue sources and modest size.

The Dayton administration responded with a fact sheet that reiterates the governor's position that a non-general fund dedicated source of revenue is needed to cover increased transportation spending.

"The problem with stealing money from the general fund to fund transportation is that it is not long term, it's not dedicated, it's not sustainable," said committee member Rep. Frank Hornstein, DFL-Minneapolis.

Democrats and Republicans agree that more spending is needed, but partisan divisions have led to gridlock.

Dayton proposed a 6.5% increase in the 28.5 cent-per-gallon gasoline tax to address what's estimated as a $6 billion shortfall over the next decade. His plan also relies on an increase in registration fees and metro-area sales taxes to fund transit.

Republicans have balked and argue the state can afford increased spending without a tax hike given its billion-dollar budget surplus.

Transportation revenues will fall $18 billion shy of the funding needed to provide a safe and efficient highway system over the next two decades, state transportation officials warned in a report last year. More than half of the state's highways are at least 50 years old and 40% of the bridges are more than 40 years old. The current gasoline tax includes a surcharge of 3.5 cents per gallon to support $1.2 billion of state bonds authorized in 2008 for bridge projects through 2018.

Minnesota carries a AAA rating from Fitch Ratings while Moody's Investors Service and S&P Global Ratings rate it at the Aa1/AA-plus level.

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