As many Minnesotans packed up the car for their Fourth of July weekend few, if any, realized their independence had been dealt yet another blow. As they headed out to celebrate and reflect on that moment when the American colonies declared their independence from the British crown, Minnesotans were losing just a little more economic freedom of their own. On July 1, the state of Minnesota imposed two more tax increases.
The first is an increase in the gasoline tax of 1.6 cents per gallon. It is the fourth gas tax increase since the state Legislature passed a $6.6 billion tax package in February 2008. That legislation included an 8.5 cent gas tax increase, an additional ¼-cent sales tax increase in five metro counties, as well as increased license and auto excise taxes. These were just what the Minnesota economy didn't need as we headed into a recession.
The second tax increase, which went into effect on July 1, is a 3/8-cent sales tax increase which will raise $240 million per year to fund a bunch of special interest projects in the name of the arts, cultural heritage and outdoor entertainment.
This is the sales tax you may remember voting on last November. You may or may not have realized that this constitutional amendment was a tax increase because the wording was so convoluted. It was the tax increase that special interest groups told you in their advertising would save Minnesota's endangered drinking water. So, as you fill up the tank and as you pay the increased tax on most of the items that you purchase, you may want to consider how this money is really going to be spent.
First, most of the $480 million of tax revenues won't be spent on water quality programs and only $5.5 million on drinking water protection. This is not exactly what Minnesota voters were told they would be "investing in" with the revenue from the increased sales tax. Most of the money is to be spent on programs and projects already funded through existing state agency programs like the $127 million which goes to Minnesota's Department of Natural Resources.
Another large chunk of the $480 million of your sales tax dollars goes to fund arts and cultural heritage. They forgot to mention to you last year in those television ads promoting a "yes" vote that $93 million would be spent on arts and crafts, $43 million of which will go to the state's Art Board - which already receives almost $20 million in state funding. So do the math: funding for the arts more than doubles while the state budget shortfall peaks north of $6 billion.
Besides the art lovers getting a double dip of cash, let's not forget the "parks and trails" crowd. They too got a piece of the pie in the dedicated funding game. The parks and trails funding amounts to $65 million out of the $480 million. But of the $65 million, almost half, or $27 million goes to the Metropolitan Council. Wait, I thought those were the folks who were suppose to run the buses. With questionable success, we are now giving the Metropolitan Council the authority to dole out $27 million for local parks. So if we are handing out $27 million in park and trail funds, should city and county property taxes be reduced to reflect this infusion of new revenue?
As the old axiom states, "When all is said and done, more is said than ever done." This is certainly true for our new sales tax which will fund loads of pork projects for special interest groups... and regretfully for the next 25 years.
Constitutionally dedicating tax revenue is bad idea from the start. Various needs of our state should compete against other needs because priorities change and revenue collections certainly change. If the people who voted for this tax increase last November knew how the state Legislature was going to lard up the special interest spending for these pet projects, my guess is they would like a "do over" election which would likely produce a different outcome. Maybe the same is true for the most recent U.S. Senate election. The moral of the story is be careful who and what you vote for.
Phil Krinkie is a former Republican state representative from Lino Lakes and the president of the Taxpayers League of Minnesota.