Two new transit taxes -- a quarter-cent sales tax and a $20 fee on new- and used-car sales -- kick in Tuesday in Hennepin, Ramsey, Anoka, Dakota and Washington counties.

The new taxes will bring in about $95 million over the next 12 months to pay for bus, light-rail and commuter-rail improvements in the metro area, the Minnesota Department of Revenue estimates. The sales tax is equal to a penny on a $4 purchase or 25 cents on a $100 buy.

A new five-county transit board known as the County Transit Improvement Board (CTIB) will receive the first revenue in September. And as one of its first actions, the transit board is expected to commit tax proceeds to pay one-third -- or $270 million -- of the cost of building a Central Corridor light-rail line between Minneapolis and St. Paul, said the board's chairman, Peter McLaughlin.

The guarantee of that local share will help the project compete against other projects for federal aid, he said.

There are two other proposals likely to be considered for early funding.

They are a Fridley station for the Northstar commuter-rail line set to open next year and a park-and-ride station on Cedar Avenue in Apple Valley. Construction of both stations could start next year if they receive transit tax revenue.

All seven metro counties were given the option to adopt the sales tax to expand bus and rail service in a $6.6 billion state transportation bill passed in February by legislators over the veto of Gov. Tim Pawlenty. The counties' boards voted on the tax option this spring. All except Scott and Carver counties chose to participate.

Because the tax has gone into effect barely four months after the enabling legislation was passed, local leaders had to quickly assemble the mechanism to govern its use. Here are the key features of the system they developed:

The board: The new board is made up of two commissioners from each of the five counties.

Hennepin County will be represented by County Commissioner Peter McLaughlin, head of the new board, and Commissioner Mike Opat. Anoka County is represented by Commissioners Dennis Berg and Dan Erhart; Dakota by Commissioners Paul Krause and Nancy Schouweiler; Ramsey County is represented by Jan Parker and Jim McDonough; and Washington by Commissioners Myra Peterson and Dennis Hegberg.

The board will meet July 24 to begin considering urgent needs for the new revenue. Projects ultimately selected to receive money could get underway as soon as next spring, officials said.

The counties are cooperating to make quick progress, McLaughlin said. "We are seeing it as the opportunity that we have been asking the Legislature to give us for a long, long time."

City-county advisory panel: Although counties will lead the new transit board, cities also will play a role in choosing where to spend the new transit tax revenue.

On July 21, the Association of Metropolitan Municipalities will oversee the election of six suburban officials who will advise the new board on which projects to select for funding. They will be chosen by the approximately 70 cities in the five-county area.

Suburban cities each will have one vote to help elect the six suburban representatives -- two from Hennepin County and one each from the four other counties. Suburban officials will meet at the state Capitol to cast their votes. Minneapolis and St. Paul also will appoint one representative each, so the city-county advisory panel will have a total of eight representatives.

City officials are eager to help direct the money, said Louis Jambois, executive director of the Association of Metropolitan Municipalities. "We have just had a ton of inquiries from city officials about a position on this board. I expect several candidates from each participating county to run for this board."

The tax: The transit sales tax applies to the same items already subject to the state sales tax, including goods, meals, lodging, some services and some utilities. Groceries and clothing are not subject to sales taxes.

More than 113,000 businesses within the five counties were notified by the Revenue Department to begin collecting the tax Tuesday, said Anne Gravelle, sales tax specialist for the department.

"This is the shortest time we have ever had to set up a local tax, and considering it affected the most people, I think it went as well as could be expected," Gravelle said.

Cost of collecting: How much the Revenue Department will take off the top to cover its cost to collect the tax is still under discussion. The department initially suggested a fee of $2 million a year -- roughly 2 percent of the revenue. The counties balked at that, saying it was too high.

A 2 percent fee is standard, but in light of the large amount to be collected by this tax, the Revenue Department agreed to review its costs, said department spokeswoman Kit Borgman.

"This is one of the biggest taxes we've administered -- both in terms of volume and dollars," Borgman said. "Both count in determining our costs. ... What we want to do is charge what it costs."

For more information on the new tax, go to the Department of Revenue website at www.taxes.state.mn.us.

Laurie Blake • 612-673-1711