Will Minnesota counties levy $10 wheelage tax? Thursday deadline looms

Anoka County Commissioner  Scott Schulte
Anoka County Commissioner Scott Schulte recently voted with a majority of commissioners to stop collecting the wheelage tax, which will cost the county about $1.3 million in lost annual revenue. "The Legislature handcuffed us," said Schulte, who wanted the $10 fee to remain at $5.
MPR Photo/Mark Zdechlik

For decades, Minnesota let metro Twin Cities counties tack $5 onto vehicle license tab renewals to meet local needs. When the Legislature this year extended that option to all 87 counties   and then doubled the fee to $10   it seemed like a county commissioner's dream come true.

But as a Thursday decision deadline looms, counties are nearly evenly divided on whether to charge the "wheelage tax." Forty counties so far have voted to collect the fee next year.

Some commissioners are embracing it as a way to raise cash for road projects without voter approval. Others say the Legislature's take-it-or-leave-it offer makes it unworkable in their counties.

In Anoka County, commissioners voted recently to stop collecting the wheelage tax, a move that will cost the county about $1.3 million in lost annual revenue.

"Frankly if they had left it alone at $5, this probably wouldn't have come up and wouldn't be an issue," said Anoka County Commissioner Scott Schulte, who voted with the majority to scrap the fee. "The Legislature handcuffed us."

The doubling, though, apparently helped persuade Hennepin and Ramsey counties to add the surcharge for the first time.

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Julie Ring
Some counties will use new cash from the wheelage tax to increase spending while others will mix spending hikes with property tax cuts, said Julie Ring, lobbyist with the Association of Minnesota Counties, which pushed to double the fee and expand the option to all counties.
MPR Photo/Mark Zdechlik

Hennepin expects to collect $8.6 million a year from the new car and truck tab surcharge. "It's going to raise the quality of the road and bridge system in Hennepin County, save on property taxes (and) modernize the system," Commissioner Peter McLaughlin said.

McLaughlin views it as a "user tax" targeted at drivers who use Hennepin County roads the most and thus would benefit from road and bridge upgrades.

Some counties will use the new cash to increase spending while others will mix spending hikes with property tax cuts, said Julie Ring, lobbyist with the Association of Minnesota Counties, which pushed to double the fee and expand the option to all counties.

She said she doubts any county will simply cut what it spends already on roads and bridges dollar for dollar by the amount the new fee brings in.

Meeker County Commissioner Mike Houseman, though, thinks that's exactly what would happen.

In Meeker County, west of the Twin Cities, commissioners narrowly rejected the fee in early July. Houseman voted against it, even though he says the $225,000 it would have raised every year would have come in handy.

Peter McLaughlin
Hennepin and Ramsey counties are adding the wheelage surcharge for the first time, and Hennepin expects to collect $8.6 million a year. "It's going to raise the quality of the road and bridge system in Hennepin County," Commissioner Peter McLaughlin said.
MPR Photo/Mark Zdechlik

"We have pent-up demands," he said, "and not just in road construction."

But Houseman calls the wheelage tax offer a "shell game" that would end up financing growth in county spending that has nothing to do with transportation.

He's convinced that had the fee passed, Meeker County commissioners would have simply reduced their existing road budget by the amount they would raise with the new tax. That would free up money for other county projects but not increase overall spending on transportation, he said.

"When the politician comes to you and says, 'Yeah, we're going to throw this wheelage tax on and it's going to go to transportation," that sounds really good," Houseman added. "And when I say that   when I say it's going to go to transportation, everybody implicitly thinks it means new money. It just isn't necessarily true."