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Wheelage Tax May Hit Bumpy Road in Rural Minnesota

2007-01-30 00:00:00

Jan. 30--When three metro counties each passed a $5 wheelage tax on registered vehicles last summer, economic experts and politicians praised the tax that raises money for road projects within counties.

But now that counties statewide are being asked by organizations representing them to consider the wheelage tax, smaller counties with comparatively few vehicles to tax are skeptical. Sure, Dakota County is likely to raise nearly $2 million a year through its wheelage tax. But what's in it for sparsely populated counties such as Clearwater, which might not even clear $100,000 a year from such a tax?

Those less-populated counties -- most of them far from the metro area and none with prominent cities -- prefer a new statewide gas tax.

"Every county in the state is hurting for funding, and you can't ignore anything that would bring in money," Clearwater County engineer Dan Sauve said from Bagley, in northern Minnesota. "But we have only 20,000 registered vehicles in our county. How will that bring in enough money to make a difference?"

Counties have been told by the Association of Minnesota Counties to consider asking for as much as $20 per registered vehicle -- although the three counties that adopted this "user" tax are charging $5 per vehicle.

Dakota County, the first to pass a wheelage tax, expects to raise as much as $1.7 million a year with it. Anoka County has predicted it will raise $1.4 million a year to be used on road projects. Washington County predicts it will raise $927,000, all of which will stay in the county.

Road weary and tax deprived

"Every dollar stays in the county; that's it in a nutshell," said Carol Lovro, transportation policy analyst with the Association of Minnesota Counties.

With no recent increase in highway tax dollars, "counties are falling further and further behind," said Lovro. By issuing a wheelage tax, counties can maintain major arteries that may attract regional travelers willing to spend money in the counties they visit, Lovro said.

Olmsted County, which includes Rochester, has about 150,000 registered vehicles. A wheelage tax could generate $2.6 million, said county engineer Mike Sheen, who favors the tax.

"I think it's a lot more predictable revenue stream than a fuel tax," Sheen said. "We only get $3 million in highway aid from fuel tax. This would be a huge increase dollarwise for us."

Yet, there is a lingering concern in outstate Minnesota that a wheelage tax will only benefit the larger counties in the metro area or counties such as Olmsted, in southeastern Minnesota, which boast unusually large county seats.

Funding crisis

"The concern is the larger the populace, the greater the share," said Keith Carlson, executive director of the Minnesota Inter-county Association, which represents several counties in the metro and exurban areas and counties that feature destination cities -- such as St. Louis County with Duluth, Stearns County with St. Cloud, and Blue Earth County with Mankato.

Even in some of those counties, experts are not rushing into the proposed wheelage tax full throttle. Marcus Hall, public works director in St. Louis County, said he's not sure the County Board will implement such a tax.

Sure, there are enough vehicles in St. Louis County to make the tax "worthwhile," particularly in Duluth, he said.

"We're in a funding crisis mode and need all the tools in the tool bag we can get," Hall said. "But a new tax is a new tax, and that isn't always well received. Some people think the gas tax is still the fairest way to go."

But neither is spending property tax money on county and state roads, Sauve said from Bagley.

"When I look at what we pay per capita for roads here, we pay a lot more than people in the metro area pay," he said. "That's why I prefer a gas tax over this new tax. We don't have as many people here, but we have the same road problems."

Paul Levy -- 612-673-4419 -- plevy@startribune.com

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Copyright (c) 2007, Star Tribune, Minneapolis

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