Minnesota counties consider new wheelage tax to pay for roadsSt. Louis County commissioners on Tuesday debated for the first time charging drivers in the county a $10 tax per vehicle to help boost county road construction projects.
By: John Myers, Duluth News Tribune
St. Louis County commissioners on Tuesday debated for the first time charging drivers in the county a $10 tax per vehicle to help boost county road construction projects.
So far commissioners have made no decision. But at least one, Steve Raukar of Hibbing, suggested that he may forward a resolution on the tax later this month.
While commissioners have been reluctant to boost taxes and fees for residents, the prospects of more money for sorely needed highway work is tantalizing. The money would come from a “wheelage tax” paid when drivers register their vehicles with the state each year. And while not all of the 225,336 vehicles registered in St. Louis County would be subject to it, estimates are the new tax would raise more than $1.5 million annually for county road repairs.
“Right now I’m a maybe on this. I think Public Works makes a very good case both for the projects they could do, and for the tax,” said County Commissioner Frank Jewell, who represents central Duluth. “I don’t think there’s a question as to the need. But I need to hear more debate.”
Until now, only Twin Cities metro counties had the authority to levy a $5 wheelage tax. Only Anoka, Carver, Dakota, Scott and Washington counties have actually charged their drivers.
But county commissioners across the state are now mulling the idea to help fill their coffers after the 2013 Minnesota Legislature expanded the option to all 87 counties, up to $10 per car or truck.
The new county taxes could not take effect until 2014 registrations.
Brown, Mower and Rice counties already have approved the new tax,said Julie Ring, legislative coordinator for the Association of Minnesota Counties. Hennepin County will hold a public hearing on the tax Tuesday with commissioners there set to vote in mid-July. Counties have to decide by Aug. 1 if they want to charge the tax in 2014. Otherwise, they’ll have to wait another year.
“There are a lot of county boards at the same point as St. Louis who have studied it and now are discussing it and have to decide,” Ring said.
While the state already gives each county a share of gas tax money to repair major roads, called County State Aid Highways, many miles of lesser-traveled county roads don’t qualify. Those roads have to be repaired with money from county property taxes.
St. Louis is the largest county east of the Mississippi River in square miles, with more than 3,000 miles of road under its care, including 1,500 miles of gravel roads, 596 large bridges and 400 large culverts. About 1,500 miles of those roads don’t get state highway aid.
With gasoline taxes shrinking due to better-mileage vehicles and fewer miles driven, highway experts say other sources of revenue will be needed to maintain roads, bridges and highways across the nation. Options such as a per-vehicle tax are considered more equitable than general taxes because they are paid by drivers who use the roads. Residents who don’t drive don’t pay. Those with more vehicles pay more.
County Commissioner Pete Stauber of Hermantown said he, too, was undecided on the issue after Tuesday’s Committee of the Whole discussion and presentation by Jim Foldesi, the county’s Public Works director. Foldesi said it was his job to lay out the need and the options, but that commissioners will have to decide the policy.
Foldesi said his goal would be to apply any new money to the very worst paved and gravel roads. The new wheelage tax money would allow the county to repair an additional 12 miles of roadway each year.
“We’re in a situation where we have a large portion of our pavement miles in a very poor condition, and a lot of those are not eligible for state aid gas tax,” Foldesi said. “By imposing either the wheelage tax or a local sales tax, or both, we could better address the county roads rather than have it come from the local property tax levy.”
The Minnesota Department of Public Safety’s Driver and Vehicle Services Division collects wheelage tax on behalf of those counties, paid at the time of vehicle registration. The money is doled-out to each county and, by statute, must be used for road repairs.
The wheelage tax is paid based on where the vehicle is ordinarily stored or parked during non-business hours or when not in use. The tax is applied to most cars and trucks but not motorcycles, mopeds, trailers, boat trailers, collector cars or ATVs.
Sales tax option
Meanwhile, all 87 counties have a new option, also offered by the 2013 Legislature, to impose a sales tax on all retail sales of a half-cent per $1 to help pay for transportation and transit projects. That would raise about $9.5 million annually for St. Louis County.
The option had been there before, Ring said, but lawmakers have now removed the need for any referendum.
“In theory the board could pass it and start it yet this year,” Foldesi said.
The local sales tax alone would pay for an additional 40 miles of gravel and paved road repairs each year.
“I’m not aware of any counties that have approved the local sales tax as yet,” Ring said. “But there’s less of a time stamp on that. That can happen at any time of the year.”
Estimated annual revenue for counties from $10 wheelage tax:
St. Louis: $1,688,000