The Free Press, Mankato, MN

July 19, 2013

Blue Earth County passes on wheelage tax

$10 annual vehicle fee OK'ed by Brown, Watonwan, Le Sueur counties

By Mark Fischenich
mfischenich@mankatofreepress.com

---- — MANKATO — Brown County approved a new $10 per vehicle tax to fund road improvements last month, Le Sueur County did the same last week, and the Watonwan County Board followed suit this week. Several other area counties — including Blue Earth — appear to be content to wait at least a year before approving the tax.

The deadline to authorize the tax is Aug. 1 if counties want the revenue collected on vehicle registrations in 2014.

County boards in Blue Earth and Nicollet counties have scheduled further discussions on the pros and cons of the per-vehicle wheelage tax and another road funding option authorized for counties by the state Legislature — a half-percent local option sales tax.

Blue Earth County Public Works Director Al Forsberg has brought up the new funding alternatives at more than one meeting. While the commissioners showed little enthusiasm for implementing the new taxes in the first year, they did agree to discuss the taxes at a board workshop late this month. As a workshop, the meeting can't include a vote on the idea — meaning Blue Earth County won't be able to meet the deadline for a 2014 implementation.

"That's the impression I got: They don't want to rush into it, but we should be exploring the options available to us," Forsberg said.

With 50,500 vehicles in Blue Earth County, the $10 registration surcharge for county road projects would generate $505,000 a year, according to estimates by the Association of Minnesota Counties. The local sales tax would be even more of a windfall. In 2011, for instance, it would have generated $5.3 million in Blue Earth County.

In Nicollet County, the wheelage tax would bring in just under $260,000 and the sales tax a bit more than $1.2 million. That compares to $1.82 million in property taxes collected in the county for construction and maintenance of roads and public works buildings, said Seth Greenwood, Nicollet County public works director.

State assistance for both construction and maintenance of Nicollet County's 246 miles of designated "county state-aid highways" totals more than $3 million annually. So the wheelage tax revenue would pale in comparison to the funds available for the CSAH roads.

But Greenwood said counties will have the option to increase the wheelage tax to as much as $20 per vehicle in 2018, doubling the potential revenue. And even $260,000 available in 2014 would be meaningful when it comes to the 67 miles of mostly gravel roads that the county is solely responsible for maintaining.

"We have to rely solely on the (property tax) levy," he said.

Greenwood informally laid out the gap between current funding and current needs at a Nicollet County Board meeting last week, and the board scheduled a further discussion at next week's meeting.

For Watonwan County Public Works Director Roger Risser, approval came on Tuesday — although just barely. On a 3-2 vote, the County Board passed the wheelage tax for 2014. With 11,400 vehicles in the county, the new registration fee will bring in $114,000 next year, and Risser also expects the dollars to be aimed at those county-supported local roads.

With the property tax levy for roads and bridges topping out at about $1 million, the new wheelage tax will bring roughly a 10 percent bump in locally generated funds.

"It's good news for the local road and bridge fund," Risser said.

Brown County was the wheelage tax pioneer in south-central Minnesota, unanimously approving the tax in late June that will bring in an estimated $286,000 in new revenue. The Le Sueur County Board also was unanimous in approving what is expected to generate $310,000 in annual revenue.

The relative popularity of the wheelage tax, which has been available to metro counties for years, is in contrast to a more cautious approach to the lucrative local sales tax that counties also could approve — although a public hearing must be held prior to any approval.

"I don't know of any county that's definitively decided to use the local option sales tax," said Margaret Donahoe, executive director of the Minnesota Transportation Alliance.

The Aug. 1 deadline for approving the wheelage tax isn't in place for the sales tax, so counties may have put the sales tax on the back burner. For low population counties, the wheelage tax generates as little as $50,000 a year, and the sales tax option may ultimately be more attractive in those cases, Donahoe said.

"I think there's a certain amount of interest," she said.

When it comes to county engineers, there's interest in any new funding options, Greenwood said.

"Everybody's been beating the drum every year about just how short we are of funding," he said. "So it should come as a surprise to no one."