UPDATED: County considers doubling wheelage tax, but doesn’t

The Mille Lacs County commissioners decided at an Aug. 1 workshop that at least three of five would not vote in favor of doubling the county’s wheelage tax from $10 per vehicle to $20 per vehicle. Had they been in favor of raising the tax, they could have added the item to their regular meeting agenda for a vote that day.

Commissioners Tim Wilhelm and Genny Reynolds and Board Chairman Roger Tellinghuisen indicated they were not in favor of the tax. Commissioner David Oslin said he’s in favor of an increase because the county has many more miles of road than it has funds to maintain and improve them.

Commissioner Phil Peterson said it seemed like the question is whether people want to pay more for license tabs or more for levied property taxes. He said he pays a big property tax bill already and if the job of fixing roadways could be done with a $10-per-vehicle charge instead, it might be better than a $1,000 increase in property taxes.

Minnesota legislators cleared the way in 2013 for counties to enact a $10 wheelage tax and begin collecting it in 2014. The language of the law also says it is at the counties’ discretion in 2018 to increase the wheelage tax by as much as $10. If the county wanted to increase the tax, it would have needed to notify the state by or on Aug. 1.

The state enacted legislation in 2014 that allowed for counties to create the wheelage tax. People pay it when they renew annual vehicle-registration tags, and the money is collected by the state Driver and Vehicle Services Department.

County Administrator Pat Oman explained that the current dollars for road maintenance are not enough, especially public works equipment such as snow plows and graders. He said the levy for public works has deliberately been kept low in recent years; for example, its portion of last year’s levy was $40,000. He said the department has large equipment needs.

The county has been using money in the $1.8 million capital-improvement fund to purchase new public works equipment, and the fund needs to be replenished. Oman said the only three ways the county can get money for roadways is through the tax levy, wheelage tax and local-option sales tax.

A local-option sales tax enacted last year has begun to generate revenue, but the money must be spent on projects that were designated before the tax was enacted. If the sales tax generates more than expected, the county could use any excess money for a transportation project of its choosing.

The commissioners talked about state-aid money and projections for increased funds in the coming years. They acknowledged the money is not guaranteed and doesn’t cover all the county’s road needs. County Engineer Bruce Cochran said the state aid is exactly that – aid – and is not intended to fully fund roadways. He said the county still has responsibility for its roads.

Tellinghuisen said he thinks the county needs to do a lot better job of selling off its used equipment. His point was that Mille Lacs buys them new on the state-bid system, takes a hit as they depreciate and then loses again when they’re sold at auction for practically salvage prices. He wondered if the state-bid system offers an advantage over the private market.

The county has 12 plows and replaces the oldest one each year. Discussion then touched on possibly using online or bigger auction houses to sell the equipment. Citizen Lee Minks said he drove a plow for Sherburne County and had the same machine for 20 years. One of the regular maintenance practices was to remove rust and paint them.

Oman said the approximately $250,000 the county would receive from doubling the wheelage tax “seems like a lot, but there needs to be more.” Oslin reminded commissioners they could put the tax on, see if it works and take it off if it wasn’t working.

Tellinghuisen said once tax is enacted, it rarely goes away. Another citizen attending the workshop pointed out the board does not have to double the tax as was proposed. She also expressed concern about how quickly the topic came up for action with no time for citizen comment.

The non-specific subject of wheelage tax has been mentioned in meetings, but no significant discussion took place until the July 18 workshop when commissioners agreed to consider an increase at their Aug. 1 workshop. The item could have been added to the Aug. 1 regular-meeting agenda for a vote.







The Mille Lacs County Board will convene for a workshop 8 a.m. Tuesday, Aug. 1 at the historic courthouse to consider passing a resolution that morning at its 9 a.m. regular meeting that could double the $10 wheelage tax to $20.

Minnesota legislators cleared the way in 2013 for counties to enact a $10 wheelage tax and begin collecting it in 2014.The language of the law also says it is at the counties’ discretion in 2018 to increase the wheelage tax by as much as $10. Counties can decide to increase the tax in whole-dollar increments to an amount anywhere between $10 and $20.

County Administrator Pat Oman and the commissioners discussed briefly at the end of a July 18 workshop how if they want wheelage-tax increase, Mille Lacs needs to pass a resolution and send a letter of intent to the state by or on August 1.

Oman verified that a yes vote on the possible resolution Tuesday would trigger the letter to the state and represent a confirmation of the increase.

A look back, lead up

The state statute 163.051, County Wheelage Tax, was enacted in 2013 as a way to help counties pay for roads. Mille Lacs County passed the tax on a 3-2 vote, and Sherburne County enacted it as well, to the dismay of many drivers who then had to shell out $10 more per year to drive on county roads.

The $10 is charged and paid at the time people renew their annual vehicle-registration tags and is collected by the state Driver and Vehicle Services Department. Two estimates of how much the wheelage tax generates have been discussed in meetings during the past 18 months: about $240,000 per year and about $22,000 per month.

The tax applies to motorized vehicles with these exceptions: Motorcycles and motorized scooters and bicycles, trailers and semitrailers, any vehicles not subject to annual registration such as collectors and state-owned tax-exempt vehicles.

The money collected from the wheelage tax may be used for “highway purposes” to allow for roadway or equipment investments and ease the need for levy increases, Oman said. The other source of funding for county roads besides the tax levy and the wheelage tax is the local option sales tax the county enacted in 2016. The local tax is expected to generate somewhere in the neighborhood of $1 million per year for its 10-year duration.

The wheelage tax popped up during 2016 discussions about implementing the sales tax, and the consistent message from the county administrator and engineer is that amounts from the tax levy and wheelage tax are not enough to maintain Mille Lacs County roadways.

At a December 2015 public meeting about the local-option sales tax, the audience was told the wheelage tax and levy don’t cover the needs for county roads. In February 2016 the board was told the wheelage tax generates “only a small fraction” of one of the many transportation projects needed each year.

Those same points were briefly reiterated in July 2016 and again in February and May this year. The county received a letter in April from the DVS reminding it of the Aug. 1 deadline to request an increase in the wheelage tax. Discussions about the 2018 budget have been underway for several weeks.

At the June 27, 2017 Mille Lacs County Board workshop, Oman said he’d be bringing up a wheelage tax increase to consider because there are still more county roads to be done that won’t be covered by the new tax. There are also the future considerations for a public works building and possibly some kind of contribution toward the roundabout in Princeton.

Oman brought up the wheelage tax at the July 18 workshop and after brief discussion, the commissioners decided to discuss it in more detail at the Tuesday-morning workshop and regular board meeting.