Counties mull wheelage tax in wake of state levy limits
WORTHINGTON -- When the Minnesota Legislature voted earlier this year to enact levy limits for 2014, limiting the amount of revenue counties can collect in property taxes to fund services, they also offered a carrot to counties -- an opportunity to implement a new tax.
Counties across the state are now faced with the decision to take the carrot and collect a wheelage fee of $10 per vehicle. In southwest Minnesota, implementation of the fee could generate anywhere from $93,880 in Rock County to $204,820 in Nobles County.
"With levy limits on, it's going to become even more difficult to have money for transportation," Nobles County Public Works Director Stephen Schnieder told county commissioners earlier this week. "This is a way to raise revenue. It is a user fee, which is something that's not bad."
County commissioners will be required to take board action by Aug. 1 if they want to implement the wheelage fee starting in January 2014. If all 87 counties were to enact the wheelage fee, it could amount to an additional $46.8 million for transportation projects, according to estimates by the Minnesota Transportation Alliance.
Certain vehicles are exempt from the fee, including motorcycles and mopeds, recreational vehicles, classic or collector cars, street rods, utility trailers, tax-exempt vehicles and contract, semi and farm trailers.
Counties in southwest Minnesota have mixed reaction to the wheelage fee. Schnieder sees it as a way for Nobles County to recoup some of the transportation dollars lost over the years, while Rock County Administrator Kyle Oldre sees it as just another tax.
"Call it a fee, it's a tax," said Oldre, adding that although his board has not taken formal action, "Rock County is not interested in pursuing the wheelage tax. We're just not interested in laying another tax on taxpayers."
Oldre said Rock County commissioners "hate it that the state imposes a levy limit, which they see as a tax on everyone in a fair way," yet then offer what he called a back-door tax.
Whether the tax is fair or not is debatable. It would only be applied to people who own and drive a vehicle, and the money generated from the $10 per vehicle fee is earmarked specifically for county transportation projects -- roads and bridges.
The wheelage fee is thought to make up for some of the losses statewide in gas tax revenue, as less gas is being purchased with more people driving smart cars and fuel-efficient vehicles. The gas tax, however, can only be used on the county state aid highway system -- not on county roads.
Besides, Oldre said it isn't those fuel-efficient vehicles that are causing the damage to county roads.
"How much damage does the flex-fuel vehicle do, versus the honey wagon pulling manure?" he asked. "We're not getting the money from where it needs to come from."
Bridges have to be made wider because of bigger combines and other farm equipment, and grain wagons now built to haul 2,000 bushels of grain -- the equivalent of two filled semi trailers -- "crush aggregate and turn our county roads into powder," Oldre said.
While farm implements are exempt from the wheelage fee, Schnieder contends that all vehicles charged the user fee benefit from a good transportation system.
"(Vehicles) need that surface to be able to operate," he said. "You need safety features that all other vehicles need. Cars need that roadway to travel, and they need to share in the cost of that roadway. They need drainage, signs, the snow plowed -- they all need to pay for it."
Schnieder said farmers are paying their share in property taxes, and some of that money does funnel into the transportation fund.
One of the main reasons Schnieder will push for the wheelage fee to be implemented in Nobles County is because of the continued reduction in funding for transportation projects locally. In the last 30 years, he said, the public works department's revenue from property taxes has changed little, forcing cuts in services.
Surrounding counties appear to be in better shape.
In the 13 counties that comprise the Minnesota Department of Transportation's District 7, Schnieder said the average income for county roads in 2012 was $16,170. In comparison, Nobles County's 2013 revenues are $11,991 per mile. Cottonwood County gets $13,095 per mile, Rock County is at $13,886 and Murray County collects $16,442 per mile.
"When added up over the past 10 years, Nobles County, on average, received about $4 million less than other counties in the district," Schnieder said.
Even comparing staff and the miles they cover, Schnieder said they have three less maintenance staff people than the average in District 7.
"We're finding Nobles County is underfunded and understaffed," he added.
While the wheelage fee estimated for Nobles County in 2014 would be enough only to overlay one mile of roadway or pave one-third of a mile of gravel road, Schnieder said the money could be saved up for three to five years to make a greater impact.
"If you save it up for three years, you could pave a mile of gravel road," he said. To rebuild a mile of roadway would require five years of saving.
"When you've got 470 miles of road ... it doesn't get a lot done," he added.
Schnieder said whether counties choose to implement a wheelage tax comes down to need. As he sees it, Nobles County has a need.
"If they don't do the wheelage tax, we'll continue to do what we can with what we have," he added. "That's the way we operate."
In a brief discussion at the county board meeting earlier this week, Commissioner Don Linssen said he'd like to see a sunset in place -- maybe the tax could be tried for two or four years and then rescinded so it isn't ongoing.
"Since the legislature can't do their job, they're forcing this on to counties," he added.
The way the state set up the wheelage tax option, vehicle owners would be charged $10 each year from 2014 through 2017. In 2018, the maximum wheelage tax would increase to $20, although counties could choose to keep it at $10 or any $1 increment up to $20.
Nobles County commissioners are slated to take up discussion on the wheelage tax again at their next board meeting, slated for July 2.
Cottonwood County Engineer JinYeene Neumann said that while she has talked about the wheelage fee with commissioners there, a decision has not yet been made.
"The commissioners are considering it -- they could go either way," Neumann said.
In just her eighth week on the job, Neumann said the revenue generated from the wheelage fee -- estimated to be $122,670 in 2014 -- would help fund local county roads "because we don't get state aid for those."
"We have a need for improvements like every other county out there," she said, adding that she plans to advocate for implementation of the wheelage fee.
In Jackson County, Coordinator Jan Fransen said the wheelage fee is on the agenda for next week's county board meeting.
"The county engineer has gathered some information," Fransen said. "I don't know what (commissioners) will do. They're just looking at what the options and and how much we'll get."
If the wheelage fee was to be enacted in Jackson County, the estimated revenue for 2014 is $108,470.
If one county chooses to enact the wheelage fee and a neighboring county does not, it doesn't mean residents can cross the county line to avoid paying the $10 fee.
"When they get their license statement from the state, it will be included," Schnieder said. "No matter where you go, you still have to pay it."
Daily Globe Reporter Julie Buntjer may be reached at 376-7330.