As the state’s counties struggle to keep up with road maintenance, a proposal to double the metro wheelage tax — now a $5 surcharge added to license tab purchases — and allow it for all 87 counties has picked up political steam.
Legislation to that effect, supported by the Association of Minnesota Counties, has some bipartisan support. Proponents say it would fill gaps in road funding that aren’t covered by the statewide gasoline tax, the main source of dedicated funding for roads.
If the bill becomes law, counties would not be required to adopt a wheelage tax; they would have the option to do so by vote of their county commissioners. Metro counties have had the option to levy a $5 wheelage tax since 2007, but Hennepin and Ramsey counties have not used it so far.
“Our thoughts are that we shouldn’t be denied the same options that the metro area has,” said Jeff Mergen, chairman of the Stearns County Board, who testified before legislators in favor of the bill. “As far as different issues that I get calls about, the quality of our roads is probably No. 1.”
The per-vehicle tax is paid when drivers purchase their tabs, and the state sends the money to the county where the owner of the vehicle lives.
Statewide, there are 14,400 miles of roads that are not eligible for state gas tax revenues, and many counties report that they are not keeping up with their maintenance. These are the roads where counties typically use wheelage tax dollars, although that is not required. The only requirement is that the wheelage tax be spent on roads — not transit.
The legislation calls for a wheelage tax ranging up to $20. But supporters say the range is likely to be replaced with a set $10 because the Department of Motor Vehicle Services, which collects license tab fees, won’t have the computer capacity to accept varying amounts until 2017.
So far, wheelage tax bills have cleared policy committees in the House and Senate and will next be examined by tax committees in both houses.
Of the five counties that now levy a wheelage tax, Dakota, Anoka and Washington counties collect $1 million or more a year. With fewer vehicles to tax, Scott County collects about $500,000 and Carver $320,000.
Dakota County favors the new legislation because it would allow the county to make greater use of the wheelage tax, said County Administrator Brandt Richardson.
“We were one of the early pushers for and adopters of the initial wheelage tax,” Richardson said. Unlike the state gas tax, the wheelage tax “is generated by users in our county and it stays in our county,” Richardson said. “All counties get a share of the gas tax but we pay in as residents a lot more than we get back.”
Dakota raises $1.7 million a year with the $5 wheelage tax and prefers it to the property tax because it focuses on road users, Richardson said.
Rep. Sandra Masin, DFL-Eagan, is sponsoring the bill in the House on Dakota County’s behalf.
Ramsey County is discussing whether to make use of the tax for the first time next year to help with a $4.3 million annual maintenance need, said Ramsey County Manager Julie Kleinschmidt.
Washington County has used the wheelage tax since 2008 for 100 miles of county roads that are not eligible for state gas tax revenue, said Washington County Board Chairman Fran Miron, who spoke in favor of the bill at the Capitol. “Our roads are underfunded and many are in poor condition,” he said.
In Washington County, the wheelage tax brings in $1 million — about a quarter of what the county spends on roads each year, Miron said.
The wheelage tax gives counties flexibility, Miron said. “Counties may not rush to raise the tax but they have the flexibility to do that. It provides for that option ... that would allow us to decide how best to handle funding for our roads.”
Sen. John Pederson, R-St. Cloud, said that is why he is sponsoring the wheelage tax bill in the Senate.“I am for local control,” Pederson said. “The more spending and taxing decisions that are made by our city councils, county boards and township boards, the better our residents of Minnesota will be served. It is much easier for our residents to participate in the government process in their local communities rather than St. Paul.”
Abbey Bryduck, policy analyst for the Association of Minnesota Counties, said the bill has gotten off to a positive start. “There seems to be a lot of desire for this,” she said, but she expects it to be folded into a larger omnibus bill, making its fate uncertain.
Miron said he is optimistic it will pass because the wheelage tax relates to property tax reform, local control and local accountability. “Those things are generally widely supported by our legislators.”