Minnesota lawmakers worried about projected shortfalls in transportation funding are eyeing several familiar types of transactions for taxes, including deliveries from services like Amazon and DoorDash, and rides from services like Uber and Lyft.
These share and delivery fees are among a series of taxes passed through the House Transportation Committee to supplement the traditional sources of money for roads: gasoline taxes, tab fees, sales taxes on auto parts, and special transportation sales taxes. The bills sponsors said they are looking for new ways to fund transportation and transit, especially ones that won’t face the same declines in revenue versus inflation as a gas tax of 28.6 percent per gallon.
“I have affectionately called this law Taylor Swift Anti-Hero invoice. “This is me. I’m the problemsaid Rep. Erin Kuegel, a Spring Lake Park DFLer who is sponsoring House file 580. The invoice will charge 75 cents for most package deliveries. The lyric describes Koegel’s personal assessment of how many Amazon shipments you get in a week. An average of five would end up costing her nearly $200 annually if the bill was passed.
House File 2882 Rep. Frank Hornstein applies a percentage fee to each ride on what the bill calls network ride-hailing companies, but most people know as Uber and Lyft. Hornstein, chairman of the House Transportation Committee, said he doesn’t drive and relies on transit and Lyft to get around.
He and Koegel’s bill have called “new and innovative” ways to raise money for transportation, noting Colorado As a pioneer such approach to transportation revenue. Its more traditional House No. 2346 filing would give the Board of Met authority to levy three-fourths of a one percent sales tax in the seven counties metro area for transportation construction, maintenance, and operation.
“While we have an opportunity for general fund money, we also need long-term, dedicated, sustainable, and reliable transportation money,” the Minneapolis DFLer told his committee Thursday. While his current version would apply a percentage tax to the price of each flight, he said he’s considering changing it to a flat fee per flight similar to how Koegel would rate deliveries.
The alleged Amazon fee is expected to bring in about $210 million a year. The shape of the ride service fee is still in flux between flat and percentage fees, and estimates are still being analysed. In Colorado, a fixed flight fee of 30 percent is estimated to generate $20 million in revenue annually. A transit sales tax of 75 cents on every $100 purchase would collect between $550,000 and $600 million annually. Hornstein is also looking at an annual fee increase for the car tab for car owners that would raise $200 million annually.
Joel Carlson, a lobbyist who works for Uber, said the bill should treat all passenger services the same – limousine services and taxis. He told the commission that services like Uber already pay high license fees and other special fees every time they pick up a car or drop off a passenger at an MSP.
the Uber bill Revenue will be sent to state highway, metro area transit and greater Minnesota transit accounts.
Most of the backlash Thursday came from opponents of the package delivery fee. While Koegel mentioned Amazon, opponents included local pizza chains, small delivery companies, and grocery stores.
JJ Haywood, CEO of Pizza Luce, said it competes with larger pizza companies by offering free delivery. This will not be allowed under the invoice which requires it to be listed separately on the receipt.
“These fees are regressive, and it affects our guests and delivery people,” she said. “While 75 cents may not sound like much, it is important.” Last week, 42% of the chain’s shipments were $25 or less. Fees will amount to an additional 3%.
“How is it fair that $3,000 for a bike, couch, or washing machine in a 10-ton box truck is as fair as an $11 hoagie sandwich delivered in a 3,000-pound compact van?” Haywood said.
Letter from 14 different trade organizations including Hospitality Minnesota, Minnesota Chamber of Commerce, State Beverage Licensing Association, Retail Association, and Grocery Association raised issues they deemed “insurmountable challenges.”
“The proposed delivery fee will affect all of Minnesota, regardless of the size of their budget or where they live,” I mentioned the letter. “Because we’re facing economic uncertainty and families are making decisions about their spending, under this law, if they choose to hook up, Minnesotans will be penalized.”
the Delivery fee invoice It will go into effect July 1, 2024, and will distribute the money to the state highway fund, large cities, small cities, and towns. The fee will only apply if the items being delivered are subject to sales taxes, a condition that would exempt groceries and prescription drugs. But one taxable item in a shipment will be subject to duty.
Some of the money would go towards a “Food Delivery Support Account” that would give money to the Minnesota Council on Aging for grants to nonprofits that deliver food to help seniors.
Supporters include LIUNA, the Transport Alliance, which represents construction companies, unions, and some local governments.
“There is no magic bullet or panacea when it comes to paying for roads, bridges and the transportation system,” said Margaret Donahue, executive director of the alliance. Every source we’ve come across over the years has faced some kind of criticism. There is never the right moment to fund our transportation system.”
She said that over-reliance on the gas tax means that other ideas must be found.
“We think this could be part of a comprehensive overall transportation package,” she said, noting that it is used in other states and large cities.
Met council sales tax on House file 2346 It will be the first significant source of money that goes to that regional agency. Municipalities in the state are already allowed to charge a transportation sales tax, and this is the source Hennepin and Ramsey counties use for their contributions to regional projects like light rail and bus rapid transit.
Any new provincial taxes will be higher than the current state sales tax of 6.875% and the local option sales tax of 1.5%. The current sales tax in Hennepin and Ramsey counties is $8,025. another bill The House and Senate will add a 0.25% sales tax increase in the same district as the Met Council for housing projects and programs. It will be distributed to the government’s rental assistance program and to metro counties and cities.
Hennepin County Commissioner Marion Greene, who is chair of the Hennepin County Regional Rail Authority, said the money is needed to build and operate the transportation.
“Metro sales tax means dedicated, stable funding to get transit systems out of the ongoing budget crunch and provide fairer, more efficient service to meet the needs of our region,” Green said. “Sales tax should also cover the operations of the entire transport system to ensure that the Met Council is financially accountable in its operating decisions.”
The last statement indicates Report of the Office of the Legislative Auditor (OLA) On the Southwest Light Rail Transit project he said the Met board should have a financial stake in the project, not just manage a project driven by federal, provincial and county money.
“The legislature should establish a framework in which the government entity responsible for light rail construction also bears some financial responsibility for construction costs and any potential cost increases,” Green said, citing the review.
But Green vetoed a provision in the bill that none of the proceeds would be used for the SWLRT project, in contravention of the OLA’s proposal.
“The language that prohibits funding the project does the opposite and does nothing to end the project,” she said.
Hornstein’s proposal is much larger than Governor Tim Walz’s proposed – a 0.125% sales tax that would produce $153 million annually for transit in the Twin Cities.
Hastings Republican Shane Hodela said he’s concerned about the cumulative impact of all the tax bills.
“It’s hard to swallow a tax increase when we have such large surpluses, right?” He said. “I’m just concerned about all of these additional taxes collected on people trying to move around the state.”
Transport budget writers have struggled to explain the fact that transport financing is running into a deficit while the state budget is breaking records for surpluses with each new projection. State Department of Transportation Saw in January that car taxes and gas taxes have suffered more during the pandemic than general taxes. Gas sales fell during the lockdown and when prices rose last summer. Car sales suffered during the pandemic and again when chip shortages prolonged delivery times.
Metro Transit has also seen it run into operating deficits for years, but its impact has been delayed by special state appropriations in 2019 and an influx of money from Congress’ three major pandemic-era response bills. The termination of emergency funding pushed the agency toward what it calls the financial cliff of transit funding.