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S.F. No. 2758 - Transportation Finance Provisions
 
Author: Senator Scott J. Newman
 
Prepared By: Alexis C. Stangl, Senate Counsel (651/296-4397)
Krista Boyd, Senate Fiscal Analyst (651/296-7681)
 
Date: April 1, 2019



 

Article 1- Motor Vehicle Fuels Tax

This article raises the gas tax by five cent increments over the next two years for a total increase of 20 cents per gallon. E85, M85, liquefied petroleum gas, propane, liquefied natural gas, and compressed natural gas are all increased by a proportional percentage.

Starting in April 2022 and annually every year after that, the commissioner of revenue must determine the gas tax rate for the upcoming fiscal year, beginning on July 1, by adding to the tax rate the percentage increase in the US Consumer Price Index for the previous calendar year. The commissioner must use the United States Consumer Price Index for all urban consumers, United States city average, as determined by the United States Department of Labor.

Article 2 – Transportation Funding and Other Taxes and Fees

Section 1. Passenger automobile; hearse. The base tax rate for passenger automobiles is increased from $10 to $45. The additional tax is increased from 1.25 percent to 1.5 percent of the base value of the vehicle. The definition of “base value” is amended so that destination charges are no longer a factor in the determination. The depreciation schedule is amended as follows:

Year   S.F. 2758 percentage of base value   Current law percentage of base value

1         100                                                       100

2         100                                                       90

3         90                                                         80

4         90                                                         70

5         75                                                         60

6         75                                                         50

7         60                                                         40

8         40                                                         30

9         30                                                         20

10       10                                                         10

For the eleventh and subsequent years, the additional tax is $25 under both the bill and current law. A provision is deleted that, under current law, says that the total amount of registration tax due must not exceed the smallest amount previously paid.

Section 2. Motor vehicle lease sales tax revenue. The distribution of motor vehicle lease sales tax revenue is modified, as follows:

Fund                                                                    S.F. 2758                                                  Current Law

General Fund                                                       $32,000,000                                              $0

County State Aid (5 metro suburban counties)   50% of remainder after General Fund      38%

Greater MN Transit Assistance account             50% of remainder after General Fund       38%

State Transportation Fund (for local bridges)     0%                                                             13%

Highway User Tax Distribution Fund                 0%                                                             11%

Section 3. Deposit of revenues. This section changes the fund to which revenues from various sales taxes are deposited, from the highway user tax distribution fund (under current law) to the general fund. This applies to 100 percent of the rental motor vehicle tax (9.2 percent rate), 100 percent of the sales tax on motor vehicles (6.5 percent rate), and a set portion of the sales tax on motor vehicle repair parts ($145.6 million annually).

Section 4. Rate. The motor vehicles sales tax (MVST) on the purchase of a motor vehicle is increased from 6.5 percent to 6.875 percent.

Section 5. Repealer. A session law is repealed that required an estimation of the sales tax on motor vehicle repair parts. This is a conforming change to changes made in section 3.

 
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