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A Brief Analysis of MSA Funding Trends <br />Much of the discussion concerning transportation funding options in recent years at the Minnesota <br /> <br />State Legislature has involved <br />discussion over changes to the <br />fuel tax and motor vehicle <br />license tax rates. Fuel taxes, in <br />particular, have been the focus <br />of many transportation funding <br />advocates who have supported a <br />"permanent" new funding <br />source for transportation <br />infrastructure. <br /> <br />Figures 8, 9, and 10, illustrate a <br />primary argument often made <br />by advocates of a fuel tax <br />increase. The premise of the <br />argument is that because the <br />state fuel tax has not been <br />increased since 1988, the real <br />purchasing power of the fuel tax <br />has declined steadily since that <br />time. <br /> <br /> Figure 8 <br />Comparing State Fuel Tax Revenues 1988-2001 <br />Current Dollars vs. Inflation Adjusted Dollars <br /> ($ Thousands) <br /> r * Actual Gas Tax Revenues ~ CPi Adjusted <br /> <br />$700,000 <br /> <br />$600,000 <br />$5oo,ooo <br />$400,000 <br />$3OO,000 <br />$2OO,000 <br />$100,000 <br />$o <br /> <br />Source: Mn/DOT and Transportationa Policy Institute <br /> <br />Figure 9 compares the current statewide gas tax revenues from 1988 through 2001 to the gas tax <br />revenues adjusted for inflation on the basis of the Consumer Price Index. As the chart shows, there has <br />been steady growth in current revenues, but taking into account the effects of inflation means that there <br />has actually been a slight reduction in the purchasing power of the gas tax since 1988. <br /> <br />Figure 9 illustrates the decline of the <br />value of the gas tax in a different way. <br />In terms of the actual purchasing <br />power of the fuel tax, the twenty-cent <br />per gallon fuel tax has a purchasing <br />power of 13.37 cents in 1988 dollars, <br />so the value of the gas tax has <br />decreased by 33 percent since 1988 in <br />real terms. (Another way to make the <br />same point is that if the 20-cent fuel <br />tax had been increased annually since <br />1988 to adjust for the inflationary <br />effects, the rate in 2001 would be <br />29.92 cents per gallon.) <br /> <br /> Figure 9 <br /> Minnesota Fuel Tax Rate 1988-2001 <br />Com paring 20.cent Statutory Rate to Inflation Adjusted <br />Rate <br /> <br /> 25 <br /> <br />c 20 <br />0 <br /> <br />~ ~5 <br /> <br />¢ 10 <br /> <br />o 5 <br /> <br />Statutory 20-cent rate <br /> <br />1988 <br /> <br />90 92 94 96 98 O0 <br /> <br />Source: Transportation Policy Institute <br /> <br />13 <br /> <br /> <br />