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Road taxes may be coming to county - Hibbing Daily Tribune: News

Road taxes may be coming to county

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Posted: Tuesday, July 9, 2013 6:00 am

DULUTH — There may be several new taxes heading the way of St. Louis County residents and visitors come Aug. 1, if the County Board votes to go ahead with them.

Both would be dedicated for roads. They include:

• A “wheelage” tax, with a fee, of perhaps $10 per vehicle, for road repairs that could raise between $1.5 and $1.8 million annually. This could be collected by the driver and vehicle services division of the state Department of Public Safety (DPS) at the time of a vehicle’s registration. Previously, only Twin Cities metro area counties could collect such a tax of $5. The legislature this past session broadened the number of counties that could collect that tax.

• A one-half of a percent county sales tax, which would be applied for roads also, that may generate between $8.5 to $11 million annually, if in effect for a full year. It could go into effect Jan. 1, if approved by the board.

County Commissioner Keith Nelson of Fayal Township said Saturday that County Board members discussed the different taxes at last Tuesday’s meeting, but did not reach any decision. He said he plans to introduce a resolution today delaying any action until next June.

“I think the people I represent are paying enough taxes,” he said.

Nelson said he might be open to a partial-year “tourism” tax of one-half of 1 percent, such as from the onset of summer through Labor Day, to include visitors from downstate who use area roads when vacationing. Such a partial-year sales tax could generate about $4 million, he added.

A wheelage tax possibly could go up to $20 a vehicle by 2016, if enacted, said Nelson.

”I just see it as a hidden tax,” he added.

Actually, St. Louis County just got tax relief totaling about $13 million from the legislature this past session, from savings of about $4.5 million from the state, when lawmakers deleted the provision that county governments had to pay sales tax to the state on their own purchases; homestead and agricultural credit aid; some property tax relief; and in better payment in lieu of taxes payments, according to Nelson.

Such taxes have to be used for a specific project and then when that is finished, it is to be eliminated.

“We’re collecting enough now” for roads, Nelson explained. “I think we’re making substantial progress on our roads.”

Commissioner Steve Raukar of Hibbing said he will be introducing a resolution at today’s Committee of the Whole to implement the wheelage tax in St. Louis County effective Jan. 1, 2014.

“Albeit it is fair to say we are making progress on our road and bridge system with over $55 million being spent this construction year, it is largely due to one time state flood bonds. The fact remains that over one-half of our system is in substandard condition,” Raukar said. “I would argue that a wheelage tax provides a long-term revenue stream that has a direct connection between the taxpayer and user and is a more equitable tax to support our roads and bridge system than a sales tax.”

Public opinion surveys show that most taxpayers place a high value on quality roads and bridges as a valued return for their tax dollars, he added.

Bottom line, for less than $1 a month per vehicle, St. Louis County could repair an additional 12 miles of roadway a year, Raukar added.

In an April 28 Mesabi Daily News article on 2013 county road projects, several county officials noted the $56 million in projects was largely due to one-time funds to repair 2012 flood damage to roads.

Nelson said he had noted at last Tuesday’s County Board meeting that “some commissioners have never seen a tax they didn’t want to embrace.”

A 1 percent county property tax levy increase championed by Nelson and Commissioner Mike Forsman of Ely in 2009 went specifically for upgrading county roads. A 1/2 of 1 percent levy tax increase approved in 2012 went specifically for the gravel road improvements program.

“I think we’re catching up on our road system,” Nelson said.

The two suggested new taxes could hit some of the same people who just obtained some relief from the state this spring.

“I believe that a wheelage tax would be disproportionate to rural St. Louis County,” Nelson said.

There is a need in rural areas for more vehicles, from trailers to extra cars to pickups and more.

“In urban areas they’re using the wheelage tax to pay for mass transit,” he added.

Raukar currently is chair of the County Board’s finances committee. Nelson has served several times as chair of the finances committee.

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