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Pawlenty vetos major transportation bill

ST. PAUL - Gov. Tim Pawlenty rejected a $6.6 billion transportation funding package Friday as Democratic lawmakers look ahead to the vote that really matters: an attempt to overturn the governor's veto.

In his veto letter to House Speaker Margaret Anderson Kelliher, the governor wrote that "while there is broad consensus that the state needs to build on the record level of transportation funding we have provided over the past five years, this bill is an overreaching, massive tax increase that will further burden Minnesotans during already difficult economic times."

Pawlenty, a Republican, vetoed the bill before leaving for a National Governors' Association conference in Washington, D.C. On his weekly radio show Friday morning, Pawlenty said the Legislature was raising gasoline and sales taxes and fees on Minnesotans just as the federal government is trying to lower the tax burden amid an economic downturn.

"There's a whole bunch of reasons why this bill is oversized and too burdensome on Minnesota taxpayers," Pawlenty said.

The House and Senate, both controlled by the Democratic-Farmer-Labor Party, pushed the major road, bridge and transit package through the legislative process in short order, culminating in final votes late Thursday that indicated a veto override is not certain.

Supporters of the bill framed it as a dramatic compromise and the result of nearly two-dozen concessions made over the past few days. They said it addresses road needs in all areas of the state, provides new money for bridge improvements and pays for bus and rail expansion.

Projects that will benefit from the 10-year package are paid for with gasoline and sales tax increases, license tab hikes and state borrowing.

Rep. Bernie Lieder, a Crookston DFLer who authored the bill, dismissed opponents' claims the bill was too big and cost Minnesota taxpayers too much. He said the bill is needed because state lawmakers for two decades have "abdicated" their responsibility to adequately fund transportation.

After a seven-hour debate, the House voted 89-44 for the bill, one vote shy of the 90 needed to override Pawlenty's veto.

The bill calls for a nickel-per-gallon increase to the gasoline tax, to be phased in this year. The tax would increase up to another 3.5 cents in coming years to repay state borrowing. The bill also would raise some license tab fees on new vehicles.

Senators approved the measure late Thursday night, and Democrats hold a veto-proof majority in that chamber.

Thursday night's vote came after a flurry of last-minute negotiations resulted in the Minnesota Chamber of Commerce's support for the bill, which Democrats saw as a way to gain Republican votes.

To gain the chamber's backing, Democrats lowered a metropolitan sales tax hike from one-half percent to a quarter percent. It would not require voter approval, and the funds would be spent on transit projects.

If it becomes law, the measure would mark the first major influx of transportation spending by way of tax increases in about 20 years. The state's gasoline tax - 20 cents a gallon - was last increased in 1988.

The sales tax provisions frustrated some lawmakers. Rep. Morrie Lanning, R-Moorhead, said requiring voter approval in most counties but not in the Twin Cities area sends a mixed message.

"What kind of a tax policy is that?" asked Lanning, a House Taxes Committee member.

Rep. Paul Marquart, DFL-Dilworth, said the bill is not ideal, but it is a good compromise.

Marquart said that while many people oppose a gasoline tax increase, it is time. Only Alaska and Georgia have not increased their taxes since the last time Minnesota raised its version 20 years ago.

State Capitol Bureau reporter Don Davis contributed to this report