Boards in 47 of state's 87 counties approve implementation of per-vehicle tax in 2014.
County boards in more than half of Minnesota’s 87 counties have voted to implement a $10 per vehicle wheelage tax in 2014 to use toward local road and bridge improvements, taking advantage of a change in state law that expanded the authority to impose this tax from the seven-county metro area to the entire state.
In total, 47 counties – which are home to more than 70 percent of Minnesotans – will impose the tax next year.
The Polk County Board of Commissioners earlier this summer voted in favor of the wheelage tax.
“Our association supported expanding the wheelage tax option to all 87 counties because local governments, both urban and rural, should be making this type of decision based on their individual county’s needs,” said Joe Vene, a Beltrami County commissioner and current president of the Association of Minnesota Counties (AMC). “The wheelage tax is essentially a user-fee, which is a sensible option outside of property taxes for raising funds locally to pay for local transportation improvements in our county.”
The revenue from this wheelage tax must be used for “highway purposes” as outlined in the Minnesota Constitution and must be deposited in a county’s Road and Bridge fund. Counties have the option of collecting the tax themselves or having the state’s Department of Public Safety's Driver and Vehicle Services Division collect it and then distribute back to the county.
Only metropolitan counties have previously been allowed to levy a wheelage tax in Minnesota. Anoka, Washington, Dakota, Scott and Carver counties all currently collect a wheelage tax. The Anoka County board voted last week to rescind their existing $5 per vehicle wheelage tax because the tax will mandatorily increase to $10 on January 1, 2014. The state says that the fee must be uniform in all counties that enact the wheelage tax because the state’s computer system cannot accommodate variations in the tax from county to county.
Counties were only able to decide whether or not to levy the wheelage tax for next year, but the $10 amount may not vary. Beginning in 2018, the cap will be raised to $20 and counties will have the flexibility to set the amount of the tax anywhere up to the cap.
The wheelage tax is added to license tab renewal fees. Vehicles are taxed in the county that corresponds to the address on the tab statement. If the vehicle is kept outside the county (i.e. at the owner’s cabin), the owners can indicate a change in the location where the vehicle is kept at the time of tab renewal. Several categories of vehicle are not subject to the wheelage tax, including: motorcycles and mopeds, trailers and semitrailers, all-terrain vehicles, vehicles not subject to annual registration (i.e. collector vehicles), tax exempt, and state-owned vehicles.
While just more than half of county boards across the state voted to impose the tax, 18 of the state’s 25 most populous counties will be among those to collect a wheelage tax in 2014. In total, roughly 73 percent of Minnesotans live in a county that will impose the tax. According to figures released by the Minnesota Transportation Alliance, Beltrami County could collect $342,960 per year, while Hennepin County could collect closer to $8.5 million per year in wheelage taxes, for example. Counties that did not implement a wheelage tax this year still have the option to do so in future years by letting the state know by August 1 of any year for enactment the following year.
“The flexibility of each county being able to decide whether or not the wheelage tax is right for their community is a wonderful example of local control and decision-making,” Vene added. “Another positive is that counties can revisit the wheelage tax by August 1 of each year and decide to enact, rescind or leave it alone.”
Commissioner Vene stressed that this new road and bridge funding source should not be viewed as a complete solution to the state’s transportation funding crisis.
“Minnesota’s counties are on the front lines of delivering a safe and efficient transportation system that meets the needs of citizens and businesses in the 21st Century,” said Vene. “While we appreciate the Legislature giving local governments more authority to address some of our local road and bridge needs, we know that these tools are not enough to fix the major needs in our state’s transportation system. Minnesota’s counties will continue to press the Legislature and governor to pass a comprehensive transportation funding package that will ensure Minnesota’s roads, bridges, and transit systems are ready to help our state grow and prosper.”