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Hennepin County wheelage is tax gaining support

Chris Newmarker//July 10, 2013

Hennepin County wheelage is tax gaining support

Chris Newmarker//July 10, 2013

Officials estimate 76 percent of roughly 1.165 million vehicles registered in Hennepin County would fall under the “wheelage tax.” This photo shows traffic on Hiawatha Avenue and East 32nd Street in Minneapolis. (Staff photo: Bill Klotz)

The majority of Hennepin County commissioners appear to support a proposal to tack on an extra $10 to vehicle registration tab renewals to better maintain the county’s road system.

Four out of seven commissioners expressed support for the “wheelage tax” during a Tuesday afternoon hearing on the proposal. A vote is scheduled for next Tuesday’s board meeting.

“This is pay-as-you go. This is about paying the taxes we need today. … It is a relatively small amount, and unlike property taxes, it is predictable. … And it diversifies our revenue sources,” said Jan Callison, the board’s vice chair.

Board chair Mike Opat, however, called the proposed tax “regressive” and said he will likely vote against it. Opat did not think it fair for everyone to each pay $10 a year on a vehicle whether it is a cheap used car or an expensive new car.

“It asks the people with the least ability to pay it on a car that’s old,” Opat said.

Opat noted after the meeting that a tab renewal for a 2003 Honda Civic generally runs at $35 a year, so an extra $10 would increase costs by about a third. The $10, on the other hand, would only make up a fraction of the $800 a year paid by a 2013 Cadillac Escalade owner.

Officials estimate 76 percent of roughly 1.165 million vehicles registered in the county would fall under the “wheelage tax.” Assuming a 95 percent collection rate, the county could bring in about $8.7 million annually in tax revenue.

County Commissioner Peter McLaughlin, who chairs the board’s county Public Works, Energy & Environment Committee, is a major supporter of the tax.

McLaughlin said Tuesday that the additional money would enable the county to better improve county roads and take the pressure off property taxes that are presently used to pay debt service on general obligation bonds for road maintenance.

“This is designed to make up for what has been some neglected maintenance and modernization in our country road system for many, many years,” McLaughlin said.

Commissioner Jeff Johnson, however, asked why the county should be burdening residents with another tax.

“We could easily find that [nearly] $9 million in the current budget,” Johnson said.

Both Commissioners Gail Dorfman and Linda Higgins expressed support for the wheelage tax, saying the extra funding addressed transportation safety issues. Commissioner Randy Johnson was not present at the hearing.

Transportation boosters including the Minnesota Transportation Alliance support the tax, while the Minnesota Trucking Association opposes the tax because it sees its members disproportionately affected.

The immediate plan would be to fix up the existing infrastructure, but longer term, the money could go toward capital projects like bridge replacements.

Hennepin County staff say transportation needs over the next five years include $3.8 million-worth of safety enhancements, $29.7 million for preservation, $7.7 million to increase efficiency, $2.9 million for modernization, and $8.7 million to make the system more environmentally friendly.

“This opportunity is here to get our system to a higher level of standard,” McLaughlin said.

Some of the money might also pay off some existing transportation debt service that is presently covered by property taxes, McLaughlin said.

The tax proposal stems from a provision in the 2013 state transportation bill that expands wheelage tax authority. The Legislature extended the wheelage tax authority to all 87 counties in Minnesota and removed the $5 cap. Starting Jan. 1, 2018, counties will be allowed to charge up to $20 per vehicle.

The Hennepin County board has to let the state know by Aug. 1 whether it plans to impose the tax for the coming year.

Anoka, Carver, Dakota, Scott and Washington counties have the $5 per vehicle tax. Mower County and Rice County are among the outstate jurisdictions that have already approved the tax under the new authority, according to the Minnesota Transportation Alliance.

Ramsey County has been studying the issue.

Dakota County has volunteered to pay the costs to start up a wheelage tax collection system in the Twin Cities. Each county that opts for the tax will reimburse Dakota County about $20,000.

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