A wheelage tax increase, from $10 to $20, was proposed and narrowly failed to pass at county board last week as a way to generate additional income for heavy equipment purchases and other public works projects. A wheelage tax is a tax added to a vehicle registration fee (license plate tabs), and at the current $10 per registration in the county, the tax has generated $270,000. The county was allowed to increase this fee to $20 in any increment effective January 1, 2018.
Discussion took place prior to the regular board meeting, held on Tuesday, July 16 at the Mille Lacs County Courthouse in Milaca, in a work session.
“I’ve heard from county engineers that our needs are far outweighed from what we’re getting,” said Oman during the work session. “Staff recommendation is to move on wheelage tax because in the next three years, we’ll need a new public building.”
Mille Lacs County Administrator Pat Oman said the wheelage tax could provide a revenue stream to use toward a new public works building should the county decide to go in that direction. During the public meeting to generate public comment in June of this year, there was a large response with the public sharing their thoughts, noted Oman. One resident felt the county is “already overtaxed” with the additional half cent sales tax which was added prior to this discussion. She also noted an increase in property taxes and felt it would overburden the tax payers in the county.
Money generated from the wheelage tax is more flexible, and Oman felt the wheelage tax increase would help provide a sustainable funding mechanism for addressing the debt service payments for the 5-year capital bond for the purchasing of heavy equipment and thus eliminating the need for a county levy, which he felt would be a 2 to 3 percent increase in levy. He said it would also provide a funding opportunity for a future public works building should the board go in that direction.
Mille Lacs County Commissioner Tim Wilhelm stated his reasoning for opposing the tax increase, “A lot of residents are opposed because of high taxes … I propose that we rededicate the current wheelage tax to address the bond issues and relook at the fund balance.”
Administrator Oman replied that the state auditor cautioned them about going any lower (in the fund balance) as it may lower their credit rating.
Commissioner Phil Peterson questioned, “How are you going to fill the hole that makes in the budget?”
Oman said that the $270,000 generated from current wheelage tax is already allocated. “In February 2021, there will be a bigger debt needing to be paid,” he said. “I know we always want to keep funding low, but what should we not be doing? We can delay the roads we’re doing.”
Commissioner Dave Oslin said, “I think we should do it for a year and see how it works.”
Commissioner Peterson added, “With the results of this vote, I think you’re going to see a 6 percent [levy] increase … the right thing to do is to raise the fee to $20.”
The measure failed in a 3-2 vote with County Commissioner Tim Wilhelm voting no, Commissioner Genny Reynolds voting no, Commissioner Dave Oslin voting yes, Commissioner Phil Peterson voting yes, and Commissioner Roger Tellinghuisen voting no.
Of the 87 counties in Minnesota, 53 of them have a wheelage tax with 12 of them currently having a $20 wheelage tax.