Walz, other governors call for suspending federal gas tax

Gov. Tim Walz joined five other Democratic governors this week to call on Congress to suspend the federal gas tax amid soaring prices at the pump and Russia’s assault on Ukraine.

“At a time when people are directly impacted by rising prices on everyday goods, a federal gas tax holiday is a tool in the toolbox to reduce costs for Americans,” the governors wrote in a letter Tuesday to congressional leaders in support of legislation dubbed the Gas Prices Relief Act.

The plea comes as gas prices have rocketed more than a dollar higher than last year’s national average — rising to an average price of $4.17 per gallon, according to AAA.

The legislation is pending in the House and Senate. It would suspend the federal gas tax for the rest of the year and authorize the Treasury Department to redirect money to the Highway Trust Fund.

Walz was joined by the governors of Wisconsin, Michigan, Colorado, New Mexico and Pennsylvania. .

The governors wrote that the $1 trillion infrastructure law signed by President Joe Biden in 2021 provided $118 billion to the Highway Trust Fund and a federal gas tax pause would not hinder road and bridge construction and maintenance. “For these reasons and more, we know it is possible to invest in infrastructure and also provide meaningful relief to consumers at the pump,” they wrote.

Prices were expected to climb higher after Biden on Tuesday ordered a ban on Russian oil imports in retaliation for Vladimir Putin’s invasion of Ukraine.

After joining the request for a federal gas tax pause, Walz told reporters that he also is open to halting Minnesota’s gas tax. Taken together, a federal and state gas tax suspension could save Minnesotans more than 46 cents a gallon.

But the state tax provides about $77 million a month for roads, bridges and transportation construction costs. Walz said he would favor targeting a suspension to the summer driving season.

“I think we understand the cost of doing that because again it’s always easy for you to say, well, just suspend every tax, then we’d have a lot more money,” he said. “Well, then you wouldn’t have any roads and you wouldn’t have any school.”

Walz has sought to raise Minnesota’s gas tax on multiple occasions. First, he wanted a 20 cent increase over several years, followed by inflationary increases. In 2021, the governor pursued a 5 cent gas tax hike with annual indexed increases.

On Wednesday, Minnesota Republican Party Chair David Hann dismissed Walz’s pursuit of a federal gas tax suspension as a “laughable political stunt.”

“The governor and DFL legislators have always supported increasing, not reducing or pausing the gas tax in Minnesota,” Hann said in a statement. “Together they’ve proposed raising the gas tax on Minnesotans by 25 cents a gallon over the past few years. Now, they are suddenly concerned about rising prices — due to the shortages created by their policies to shut down oil production and distribution.”

Summer gas tax holiday?

Minnesota’s gas tax is squarely in the middle of the national pack.

Gasoline prices in the state this week are at heights not seen since 2013. The average price Wednesday was $3.93 per gallon, according to AAA, and a tad higher in a GasBuddy.com survey. Prices are up at least 20% from a month ago, and many Minnesota stations are already at $4 per gallon.

The last time gasoline costs got this ugly was in 2012 and 2013, when Minnesota prices hovered around $3.45 to $3.75 for several months — briefly spiking to an all-time nominal high of about $4.25 in May 2013, according to GasBuddy.

The motor fuel market is primarily driven by the cost of crude oil, which accounts for 56% of the price of gasoline, according to the US Energy Information Administration (EIA). The Ukraine crisis has pushed US crude oil prices to 13-year highs of more than $110 a barrel.

Taxes make up 15% of gasoline’s price at the pump, including 18.4 cents per gallon in federal levies and an average assessment of 30.6 cents a gallon from states, EIA data show. Refining, distribution and marketing expenses — including profits — account for the rest.

Several Democrats in the Minnesota House last month proposed a gasoline tax holiday during the summertime to help ease the burden on drivers.

The proposal, sponsored by DFL Rep. Zack Stephenson of Coon Rapids, would waive the 28.5 cent tax from Memorial Day to Labor Day in a bid, he said, to combat rising inflation. Stephenson has said the proposal’s expected $200 million loss in tax revenue would be paid for out of the state’s projected $9.3 billion budget surplus.

Senate Majority Leader Jeremy Miller, R-Winona, described the proposal as an “election year gimmick,” and called for permanent tax relief. House Minority Leader Kurt Daudt, R-Crown, criticized the five Democratic governors for voting in favor of gas taxes during the past few legislative sessions.

“Now with inflation out of control, and gas and energy prices through the roof in the Walz/Biden economy, they’re pushing a desperate and temporary gas tax holiday,” Daudt said in a statement.

Staff writer Mike Hughlett and the Associated Press contributed to this report.