Passage of wheelage tax increase failed on a 3-2 vote at last week’s Mille Lacs County Board meeting.
The proposed tax was one way of generating additional income for heavy equipment purchases and public works projects.
A wheelage tax is a tax added to a vehicle registration fee that occurs when license plate tabs are purchased.
Currently set at $10 per registration in the county, the tax has generated $270,000 in revenue.
The county was allowed to increase this fee from $10 to $20 in any increment effective January 1, 2018.
Initial discussion of the tax took place prior to the June 16 regular board meeting, during a work session.
“I’ve heard from county engineers that our needs are far outweighed from what we’re getting,” said Mille Lacs County Administrator Pat Oman. “Staff’s recommendation is to move on the wheelage tax because in the next three years, we’ll need a new public building.”
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 June open meeting to generate public comment, there was a large response with the public sharing their thoughts, Oman noted.
One resident felt the county is already overtaxed with the additional half-cent sales tax which was added prior to this discussion.
The resident also noted an increase in property taxes and felt it would overburden for taxpayers.
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 five-year capital bond for the purchasing of heavy equipment, thus eliminating the need for a county levy, which he felt would be a 2 to 3 percent increase.
Oman said it would also provide a funding opportunity for a future public works building should the board go in that direction.
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.”
Oman replied the state auditor cautioned about going any lower (in the fund balance) as it may lower Mille Lacs County’s overall credit rating.
County 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.”
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.” After discussion. the measure failed on a 3-2 vote with Wilhelm voting no, Reynolds voting no, Oslin voting yes, 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.
T.A. LeBrun is the editor of the Mille Lacs Messenger and covers county government for the Union-Times. She can be reached at email@example.com.