Tag Archives: gas tax

A Policy Agenda For Minnesota’s Next Progressive Governor

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In 2018, progressive Governor Mark Dayton will be retiring, and Minnesota voters will be selecting a new chief executive.  To retain control of the Governor’s office in 2018, Minnesota Democrats need a compelling policy agenda. It goes without saying that they also need a compelling candidate, but this discussion is about policy.

What constitutes a compelling policy agenda? First, it’s bite-sized. It can be quickly consumed and remembered by casually engaged voters. It’s more like five proposals, not fifty proposals. That doesn’t mean leaders should only do five things as a governor, but it does mean that they should only stress and repeat five-ish policies as a candidate, so that the agenda can be remembered.

Second, a compelling policy agenda delivers relatively bold change. It’s not merely about protection of the status quo from the bad guys, or small incremental improvements (see HRC campaign). It’s aspirational, and not limited to ideas that currently have the necessary votes to pass. If a candidate has to scale it back after elected, so be it. But they should run with a bold vision.

Third, a compelling policy agenda needs to have popular support beyond the political base. After all, a campaign agenda is about winning votes.

Fourth, it’s is easy to understand. Few have the time or inclination to study the intricacies of a 15-point tax reform plan, so candidates should stick to things that most can easily grasp and embrace.

Finally, a compelling policy agenda must be directed at Minnesota’s most pressing problems. It shouldn’t merely be about kowtowing to the most powerful interest groups, as is so often the case. It must actually be about the problems that most need fixing.

What fits those criteria? In no particular order, here’s my recommendation for a progressive gubernatorial candidate’s agenda.

  • MinnesotaCare for All Option. Allow all Minnesotans to buy into the MinnesotaCare public health insurance program. This will put competitive pressure on private insurance companies to keep premiums down, and ensure Minnesotans will always have a coverage option, even if health plans pull out of the market.
  • Transportation Jobs Fund. Increase the gas tax by a nickel per gallon — one penny per gallon per year over five years — and put the proceeds into an untouchable fund that will put Minnesotans to work improving the state’s roads, bridges and transit system. This will lift up the portion of the workforce that is struggling the most, and ensure Minnesota has a competitive economy and quality-of-life into the future.
  • Achievement Gap Prevention Plan. Ensure every child under age five has access to a high quality early learning program, starting with the children who can’t afford those programs on their own. This will prevent low-income children from falling into Minnesota’s worst-in-the-nation achievement gaps, gaps that opens before age two, lead to lifelong inequity and pose a grave threat to our economic competitiveness.
  • Fair Share Tax. Create a new, higher tax bracket for the wealthiest 10% of Minnesotans.  During a time when income inequality is the worst it has been since  just prior to the Great Depression (1928), the wealthiest Minnesotans are paying a lower share of their income in state and local taxes.   Adjusting the state income tax is the best way to remedy that disparity.
  • Super-sized Rainy Day Fund. Increase the size of the state’s rainy day fund by 25%. This will control taxpayers’ borrowing costs and help keep Minnesota stable in the face of 1) an economy that, after the longest period of economic expansion in history, may be due for a downturn and 2) a federal government that is threatening to shift many fiscal burdens to states. Bolstering the rainy day fund will also communicate to moderate voters that a progressive will be a level-headed manager of their tax dollars.

Yes, worthy issues are left off this agenda.  But we’ve seen time and again that when Democrats try to communicate about everything, they effectively communicate about nothing.  Long, complex “laundry list” policy agendas may please the interest groups who are constantly lobbying the candidates and their staffs, but they are simply too much for busy voters to absorb.  As legendary ad man David Ogilvy preached, “the essence of strategy is sacrifice.”  To be heard, many things must be left unsaid.

This kind of progressive gubernatorial policy agenda would be simple enough to be understood and remembered, but not simplistic.  It would be relatively bold and visionary, but not pie-in-the-sky.  It would be progressive, but swing voter-friendly.

This agenda would put Republican opponents in a political bind, because these progressive proposals are popular with moderate swing voters.  The partial exception is the Transportation Jobs Fund, where swing voters are conflicted.   Surveys tell us that gas taxes are somewhat unpopular, particularly in exurban and rural areas, but the transportation improvements that would be funded by the higher gas tax are very popular with voters of all political stripes, as are jobs programs.  On that front, one key is to guarantee that tax proceeds could only be spent on improvements, something many skeptical voters seem to doubt.

If such an agenda were sufficiently repeated and stressed by a disciplined candidate, fewer Minnesotans would be lamenting that they “have no idea what Democrats stand for.” Most importantly, this agenda also would go a long ways toward fixing some of Minnesota’s most pressing problems.

Fixing The Massive Leak In America’s Transportation Funding System

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Imagine you discovered your salary was going to be steadily declining in the coming years, making it impossible for you to fund future needs. Would you shrug off this news, and passively accept the associated damage, or shift to a more stable source of income?

When it comes to the funding needed to build and maintain the nation’s roads and bridges, policymakers are facing a similar threat, and most of them are shrugging it off.

The Problem

Currently, we finance much of our transportation infrastructure with a state and federal gasoline tax, where the more gasoline we use, the more we contribute to building and maintaining the transportation infrastructure.  For a long time, the gas tax has served us well.

Cursor_and_hqdefault_jpg__480×360_But the gas tax is becoming obsolete. Here’s why:  Between 2008 and 2014, the average fuel efficiency of new cars increased by 22%. In coming years, new fuel efficiency regulations and technological improvements will accelerate that progress. As as result, by 2040 the U.S. Energy Information Administration (EIA) projects that fuel sales will decrease by between 34% and 45%.  The less gasoline we use, the less we have for building and maintaining our transportation infrastructure.

“Just raise the gas tax,” you say?  Well, a paper recently written by transportation finance expert Ed Regan estimates:

“If governments want to still generate equivalent revenue to keep up with future travel levels, gas tax rates will need to be increased to as much as $1.16 per gallon to overcome the effect of future fuel efficiency.”

Given how politically difficult it has proven over the years to increase the gas tax by even a few pennies, an increase of that magnitude would seem to be politically impossible.

Even if passing such a huge increase were somehow politically feasible, we would be left with a grossly unfair system where some can avoid, quite legally, paying their fair share for funding roads and bridges.  (By the way, as someone who has driven a gas-electric hybrid for a decade, I’m one of those people unfairly benefiting from the gas tax status quo.)

If we don’t enact a steep gas tax, Regan has alarming numbers for policymakers and citizens to ponder:

By 2025, just 8 years from now, increasing fuel efficiency may cost state and federal coffers as much as $20.8 billion per year in fuel tax revenues.

Twenty-one billion dollars is a lot of road and bridge projects.  Clearly, stubbornly clinging to the gasoline tax status quo would dramatically impact our safety, global competitiveness and quality-of-life.

Yes, the Trump administration is proposing to roll back fuel efficiency standards. But many experts believe this will have only a limited effect on the trend toward greater fuel efficiency and use of non-gasoline powered vehicles. CNBC reports:

Trump’s bid to ease fuel efficiency rules will be tough and likely limited, experts say:

The White House’s attempts to alter the Obama administration’s plan to raise federal automobile fuel standards could be a slog and ultimately yield little change, experts say.

The Department of Transportation and the Environmental Protection Agency will revisit rules finalized under President Barack Obama that would keep automakers on pace to manufacture vehicles that get more miles per gallon. But experts say it will be difficult for President Donald Trump to meaningfully relax the rules under the Corporate Average Fuel Economy standards, or CAFE.

Whether driven by consumer demand, regulations or both, the march towards greater fuel efficiency seems inevitable.  The Trump fuel efficiency changes may slow the march, but they won’t stop or reverse it.

The Solution

The most logical solution to this increasingly urgent problem is to charge users based on distance traveled rather than gasoline used. Under such an approach, transportation funding would be much more adequate and stable than it is with the gas tax.

Cursor_and_410132__1600×1067_But in the stodgy world of transportation finance, old habits die hard. Charging based on distance requires a very different type of revenue collection system, and such a change is proving to be mind-bending for many policymakers.

Fortunately, at the state level various approaches are being piloted, evaluated and refined. For instance, one approach being tested with 5,000 volunteers in California gives users a range of choices for collecting a “Road User Charge.”  Volunteers can choose to track distance by using 1) a small electronic device, called a “dongle,” plugged into their vehicle, 2) a smart phone photo of their odometer sent to authorities on a monthly basis, or 3) other more low-tech tracking methods.

Moving to this type of distance-based system won’t come without headaches or expense. But everything is relative, and accepting the hassles associated with this transition is a small price to pay for avoiding a transportation infrastructure meltdown.  With as much as $21 billion in transportation funding about to disappear over just the next eight years, and much more about to disappear in the coming decades, policymakers can no longer afford to shrug off this problem.

Note:  I have done public relations work on this issue for an academic client, but the views expressed are my own.

Dear DFLers: This is Minnesota, Not MinneSweden

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These are very heady times for Minnesota DFLers. Governor Mark Dayton and DFL legislators had the courage to raise taxes, increase long-term investments, and raise the minimum wage.  In the process, Minnesota Republicans were proven wrong, because the economic sky did not fall as they predicted it would.   In fact, liberally governed Minnesota, with an unemployment rate of just 3.7 percent, has one of the stronger economies in the nation.

And the subsequent coverage from the liberal echo chamber has been positively intoxicating for DFLers:

“This Billionaire Governor Taxed the Rich and Increased the Minimum Wage — Now, His State’s Economy Is One of the Best in the Country” (Huffington Post)

“The Unnatural: How Mark Dayton Bested Scott Walker—and Became the Most Successful Governor in the Country”  (Mother Jones)

“What happens when you tax the rich and raise the minimum wage? Meet one of USA’s best economies” (Daily Kos)

Comparative_Economic_Systems__SwedenHigh as a kite from these clippings and the vindication they represent, DFLers run the risk of over-stepping, of pushing Minnesotans further than it they are comfortable going. As much as DFL politicians fantasize about bringing the social welfare model of a Scandinavian nation to a state populated with so many Scandinavian immigrants, a recent survey in the Star Tribune provides a harsh reminder that Minnesota, politically speaking, is not MinneSweden.

In the wake of a $2 billion budget surplus, only one out of five (19 percent) Minnesotans wants to “spend most to improve services.” Among the Independent voters that DFLers need to persuade in order to win elections and legislative power, only one out of four (24 percent) supports spending the entire surplus.

At the same time, two times as many Minnesotans support the predictable Republican proposal to “refund most to taxpayers” (38 percent support). Their refund proposal is also the most popular option among the Independent voters that Republicans need to win over in order to have electoral success in 2016.

The Star Tribune also reported that their survey found that Minnesotans are not too wild about the gas tax increase the DFLers propose.  A slim majority (52 percent) oppose “Governor Dayton’s proposal to raise the wholesale tax on gasoline to increase spending on road and bridge projects?”  A healthier majority (62 percent) of Minnesota’s’s Independents oppose the gas tax increase.

I happen to agree with the DFL on the merits.  Minnesota has a lot of hard work to do in order to remain competitive into the future, so I personally support investing almost all of the budget surplus, with a healthy amount for the rainy day fund, and a gas tax increase. However at the same time, I’m enough of a realist to recognize that sustainable progressive change won’t happen if Daily Kos-drunk DFLers overstep and lose the confidence of swing voters in the process.

DFLers who want to win back the trust of a majority of the Minnesota electorate would be wise to enact a mix of sensibly targeted investments, a resilient rainy day fund and targeted tax relief.  That kind of pragmatic, balanced approach won’t turn into St. Paul into Stockholm, but it might just put more DFLers in power, so that the DFL can ensure Republicans don’t turn Minnesota into South Dakota or Wisconsin.