Governor Pawlenty continues to talk to legislators about a transportation bill, but is not inclined to bring the Legislature back to special session.

"I have various ideas" for transportation funding, Pawlenty said at the Capitol, declining, however, to say which ones he favors.

He did say the menu of options includes a gas tax increase, borrowing money, using new technology to relieve congestion, paying for some transportation projects out of the state's general fund, and allowing private investors to build new highways.

...He is still not inclined to support a gas tax increase, he said. "With gas going for $3 a gallon and maybe going to $4 a gallon ... the public is skeptical" of paying higher gas taxes.

Moreover, he said, the gas tax is diminishing as a revenue producer as more drivers switch to hybrids and vehicles powered by ethanol-based E85 and, in the future, by electricity and hydrogen.

That's an interesting empirical question: Would the presence of E85 increase the price elasticitiy of demand for gasoline (and thus reduce the revenue gain from a per-gallon tax increase)? Theoretically it would, but the question is how much, and I am rather skeptical it's that large. I like the next paragraph very much:

While Minnesota has resisted private toll roads, Pawlenty said he sees some limited possibility for allowing private equity money to pay for building new roads but not for expanding existing highways.

There has been an increased interest in public-private partnerships for toll roads of late; Texas is expanding its use of leases of roads to private firms. I see no reason why this option should remain off the table in Minnesota.

But don't hold your breath that this will happen soon.

He will urge legislators to take incremental steps on transportation funding, he said, "rather than hold out for the perfect."

Pawlenty said he would not call the Legislature back for a special session just to pass a transportation bill.

He reiterated he is "not inclined" to order a special session for other unfinished business because "I'm skeptical they can be restrained" to a narrow agenda of essential items.

As pointed out before, the DFL strategy was all-or-nothing. Accepting Pawlenty's plan would have killed the push for gas tax candy for several years.

Labels: legislature, Minnesota, Pawlenty