House Tax Committee advances broad tax package that freezes gas-indexing, repeals delivery fee and reallocates transportation funds

The House Tax Committee on Wednesday advanced House File 5, a sweeping tax-and-transportation package authored by Representative Joy, voting 12-11 to send the bill as amended to the Transportation Committee.

The measure, as amended by the A13 amendment adopted on a 12-11 roll call, would repeal the retail delivery fee, freeze the automatic gas-tax indexing, double an electric-vehicle registration surcharge and change the distribution formula for the Transportation Advancement Account (TAA). The A13 amendment also redirects a one-time general-fund contribution originally allocated to the Metropolitan Council’s Blue Line project and alters allocations that supporters say will backfill lost delivery-fee revenue. Opponents said the changes would cut transit operating resources, reduce funding for senior nutrition programs, and shift money away from the seven-county Twin Cities region.

Why it matters: HF5 touches major revenue streams used for roads, transit and local aid. The committee debate focused on who benefits from eliminating the delivery fee and how to backfill the revenue — by redirecting sales-tax and other sources — and on the bill’s distributional effects for metro-area transit, small cities and social programs such as Meals on Wheels.

What the bill does (as amended): - Repeals the retail delivery fee effective 7/1/2025 and removes that revenue from the TAA funding stream. - Freezes the gas-tax indexing enacted in prior sessions, preventing automatic future increases tied to inflation. - Increases the electric-vehicle registration surcharge (commenters cited a proposed increase to $150). Representative Joy said the change was intended to “backfill” highway and TAA revenue. - Alters the TAA allocation formula and reassigns portions of a previously appropriated one-time Blue Line general-fund appropriation (the A13 amendment directs $17,000,000 from the remaining Blue Line appropriation to other transportation accounts, according to fiscal staff).

Committee debate and public testimony: Representative Joy, the bill’s author, framed the measure as making Minnesota more affordable and limiting automatic tax increases, saying the legislature should ‘‘decide if things should go up or down’’ rather than rely on automatic inflators. Opponents — including committee members and transportation and budget advocates — argued the changes would reduce funding for transportation infrastructure and for programs that serve low-income residents and seniors.

- Aurora Vautrin, legislative director for 100% (a transportation advocacy group), testified in opposition, saying the bill would have “devastating consequences for the transportation system” and warned of a large long-term funding gap for roads and bridges. - John Thorson, legislative director for LiUNA (building trades), opposed reductions to dedicated road-and-bridge revenue and warned of impacts on construction jobs and deficient bridges. - Nan Madden, director of the Minnesota Budget Project, opposed a broad Social Security income tax exemption included in the bill as drafted and cautioned the proposal would largely benefit higher-income seniors while risking future cuts to services relied on by low-income seniors. - Cap O’Rourke, executive director of the Minnesota Association of Small Cities, supported efforts to secure reliable funding for small cities’ transportation needs but urged a predictable source of revenue.

Members pressed fiscal staff for details. House fiscal staff provided a spreadsheet showing that, under the A13 amendment, the TAA would drop from roughly $147–148 million in current-law projections to about $115 million in the proposed change for fiscal 2026–27, and that the highway-user distribution (HUTD) would show reductions (for example, a $35 million reduction in 2026–27 and larger reductions in later years in the staff table).

Roll-call outcomes and next steps: The A13 amendment was adopted on a 12–11 roll call; the committee then approved sending House File 5 as amended to the Transportation Committee on a 12–11 roll call. The bill now moves to Transportation for further hearings and possible modification.

Discussion vs. decisions: Committee members repeatedly distinguished between policy debate and formal action. The committee approved the A13 amendment and formally sent HF5 as amended to Transportation; multiple members said the bill will require additional work in Transportation and urged the author and stakeholders to meet before further floor action.

Context and reactions: Opponents warned the changes would reallocate revenue away from metro transit and could cut Meals on Wheels and other food-delivery support grants embedded in the TAA formula. Supporters argued the proposal protects taxpayers from automatic tax increases and seeks to target funding differently, including backfilling some allocations with sales-tax receipts.

What to watch next: The Transportation Committee will hold further hearings on HF5 as amended. Legislators and stakeholders said they expect additional amendments, fiscal adjustments and policy negotiations before the bill advances to the House floor.