Short-sighted Anoka County Drops Wheelage Tax

I recently had to renew my motor vehicle title due to a paperwork mix-up. I didn’t dot my “i” or cross my “t” and thus was subjected to endless paperwork. While calculating the fees, I bumped into something common within Minnesota: the wheelage tax.

A wheelage tax is a $5 tax that is levied by a metropolitan county board of commissioners on vehicles kept in their county … The tax is determined by where the vehicle is ordinarily stored or parked during non-business hours or when not in use. –MN DOT

The tax goes to the county government structure. It’s scheduled to double (from $5 to $10). That’s why I was surprised when I saw that Anoka County was looking to drop the tax. From the Pioneer Press (article):

County Commissioner Matt Look said he resents the mandatory tax level of $10 imposed by the state … “The reality is, we probably would have left it alone at $5, but the state comes along and tells us it has to be 10 bucks,” he said. “It begs the question, why didn’t they start at $5? Why didn’t they call us and ask what we thought, instead of putting a 100 percent increase on people who are struggling now?”

The wheelage tax* is a user fee for roads. It’s not as fair as a direct gasoline tax where those you drive more pay more, but it’s close. If you own a vehicle, you pay $5 (or $10 soon) every time a vehicle has to be registered (typically at the point of registration). In the past decade, I have registered two vehicles and have paid a total of $10.*

How much is this tax hurting struggling people? Here’s how my recent fees looked:

Registration Fees
Filing Fee $10
Title Fee $7.25
Late Fee $2
Technology Fee $2
Wheelage Fee $5
Public Safety Fee $3.50
Assig. of Security Interest $1.00
Title Transfer Fee $6.50
Transfer Tax $10
     Total      $47.25

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The overall cost of owning and operating a motor vehicle is a lot. Estimates are around $7,000 to $10,000 a year [here here]. Direct user fees (outside of gas tax) are a very small portion of the cost. I drive noticeably less than the average American and own a 10 year old, used car outright (so, no monthly payments). However, driving still probably costs me around $3,500 to $4,000 year. Considering this, my total fees paid (including the wheelage tax) equal around less than 1% of my total operating cost for 2012.

Wheelage is a form of direct taxation; meaning that if you buy an automobile, you help pay for the maintenance of the roads you’ll be using in your local county.  This tax brings in $1.3 million of Anoka County’s $8 million road maintenance budget* [source]. That’s not insignificant.

Here’s the problem: whether this tax is dropped or not, Anoka County will be spending the scheduled $8 million in road maintenance. Now, instead of being paid for by drivers of automobiles, it’ll likely be snatched out of the other way county governments are funded: property taxes. This short-sighted dropping of the wheelage tax disproportionately punishes people who do not drive, or people who continue to use old automobiles.

This is a classic example of not reducing the overall tax burden, but merely shifting it and then calling it a victory [source].

The short-sightedness is that conservative-leaning Anoka County is dropping the tax primarily because they do not like the State of Minnesota dictating what local government can and cannot do. This is outlined in Commissioner Matt Look’s comment above, and from Commissioner Scott Schulte, who said in an interview;

“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.” – Minnesota Public Radio

Local autonomy is a conservative viewpoint; and one that I can empathize with. For example; if Minneapolis wants to create a value capture district to fund a local streetcar (or a bike lane on Minnehaha Avenue), why does it need the approval of a State or County official who doesn’t live in the area? Maybe it is wrong of the State to dictate the total cost of the fee, but on the other hand, the State isn’t dictating what can be done with the revenue. That’s entirely up to the county. The conservative argument of local autonomy really doesn’t hold up.

Compared to the cost of operating a motor vehicle, the wheelage tax is insignificant. However, just because a tax “isn’t much” doesn’t make it right. Yet, in my mind, I can’t think of a more fair way to generate revenue for road maintenance: if you use the roads, you pay for it. 

Anoka County is being stubborn for political reasons. That’s too bad because they still need to maintain the same roadway network and spend the same amount of money. Only now it won’t be from direct user fees. To make matters worse, they are shifting the burden from something that isn’t a burden (a mere $5 to $10 every couple of years) to something that is a real burden for people (property taxes).

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* The wheelage tax is not the best way to tax for roadway maintenance, but it’s certainly better than what is being proposed.

* Actually, I’m not sure if this is even true because my previous vehicle would have been transferred sometime around 2004 or 2005, which may be prior to the tax being enacted.

* It’s very surprising that Anoka County spends $8 million on road maintenance. They’ve got a lot of sprawling and rural places that have really built out road networks. it’s hard to believe they can maintain it all on $8 million.

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19 Responses to Short-sighted Anoka County Drops Wheelage Tax

  1. Matt Brillhart July 30, 2013 at 10:32 am #

    Quick error correction: I’m pretty sure the wheelage user fee is paid annually, when renewing one’s tabs. I could be wrong, as I’ve lived in Hennepin & Ramsey for some time now, and they did not charge the user fee (but will charge it going forward). I recall paying it for at least 1 year in Washington County, and it was added to the cost of renewing tabs. What a strange little wrinkle that all 5 suburban counties in the metro charged the $5 fee, while Hennepin & Ramsey did not.

    Going forward, all drivers in counties which have enacted the fee will pay $10 per vehicle, every year. Here’s a link to old information on the wheelage tax (antiquated by the law change this year): https://dps.mn.gov/divisions/dvs/Pages/Wheelage-Tax.aspx

    • Nathaniel M Hood
      Nathaniel July 30, 2013 at 12:23 pm #

      That’s correct. I should have clarified. What I paid above was to register a new (well, used) vehicle. The $5 (or $10 depending on the County) is each year with tabs. Or, for the average person, it’s about .05% of the cost of operating a vehicle for a year.

      My main argument is that it is (more or less) a user-based tax. Those who will be driving on the roads will be helping to pay for it. Having it come out of general revenue streams (for county government’s that will be mostly property taxes) is not user-based. It’s indirect and punishes people who may not own or use vehicles.

  2. Matt Steele July 30, 2013 at 10:44 am #

    One more reason to get rid of my car!

  3. Matt Steele July 30, 2013 at 10:55 am #

    Also, I continue to find it hilarious that government charges a “technology fee.” You know, technology. That investment you make to optimize your business process which reduces your costs. Yeah, let’s charge a fee for that.

    • Nathaniel M Hood
      Nathaniel July 30, 2013 at 12:24 pm #

      The technology fee is a mysterious one. My guess is that these systems are super expensive to implement, so they just charge a small fee to help cover the costs. It’s something I’m totally fine with.

  4. Matt Look July 30, 2013 at 12:26 pm #

    I appreciate the effort that has been invested into this blog,,,,good research. However the whole story needs to be told. At the heart of this thinking, there is consistency….that is to discourage people from driving automobiles and force them into public transportation. Most urban planners believe in the failed outcomes of Smart Growth, Liveable communities, bike/ped, complete lanes, global warming and the like. Ask Oregon how smart growth works (a simple google search will give you all the information this utopian thinking)
    1. Due to an effort,(few counties are doing), Anoka County has managed to operate more efficiently, saving taxpayer money. It is the only county that has cut its levy 3 years in a row. Through technology investment, restructuring, and sound decision making, we are managing our outcomes, rather than ratcheting our taxes year after year.
    2. The 8 million dollar road maintenance budget you speak of is not being cut 1.3 million. Savings realized are being redirected to keep that budget whole. In other words, the roads are being maintained at the same level, without over taxing the people to do so. Stated another way, we don’t need more money!
    3. The wheelage tax is flawed for numerous reasons, the primary of which is that ALL people use the roads, whether you own a vehicle or not. Whether it is meals on wheels, or groceries, or medications, or ambulance/police response….nothing happens without a maintained and efficient road system. Bikes use the roads, runners/peds use the roads. Should we charge them $5 (now $10)? How would that sit with urban planners? After all, if they use the roads, they should pay for it…how much more fair is that?
    The fundamental problem we have with our state today is that, very similar to a “binge drinker”, there is no limit to taxes. Initially sold as “the top 2%” should pay their share, our state legislature (DFL controlled), has managed to raise just about every tax they could get their hands on…..claiming budget shortfalls. Even after the fiscal analysis that we our state’s growth has closed that gap, they still pushed ahead. At some point, you have to PUT THE FORK DOWN AND PUSH AWAY FROM THE TABLE. Tax Gluttony…..as sin in my book. The average person pays close to 60% in taxes, with our 56 different (incomplete list) of taxes. If nothing else, it speaks the the creativity of mankind to control its own.

    So I am leaving you with the final question: Is it a shortsighted decision? I beg to differ

    • Daniel July 30, 2013 at 2:38 pm #

      Thanks for commenting Matt. Sometimes I do wonder about the thinking going on in Anoka County. It’s strange though, that given your starve-the-gluttonous-government views, you’d rather backfill the roads budget with general fund revenue to replace user fees.

      I mean it’s great you found savings elsewhere in the budget, but you ARE choosing to cut this user fee, rather than reduce property taxes.

      As much as I’d like to sock meals-on-wheels recipients with extra taxes as you imply, really the non-driver road users are paying their tiny portion of this tax through the services they buy. If I don’t have a car, but order my groceries delivered, that wheelage tax would be passed on to me in the proportion I benefit.

      Or, are user fees only appropriate for transit riders?

      Don’t you agree that severing the cost of roads from their use warps the market and encourages overconsumption of a public good?

      Would you also like to eliminate state and federal gas taxes, so road costs are paid without regard to level of use?

      • Matt Look July 31, 2013 at 2:29 pm #

        1. If you find savings (left over budgets) and you don’t backfill elsewhere…in government it will be spent. Once the needs are met the wants rise to the surface
        2. We are reducing property taxes as well. We are now the only county to have reduced our levy, for the past 3 years, cumulatively 10 million, or 10% of the amount we levy.
        3. Non drivers are not necessarily paying….in your argument. The tax is determined by where the vehicle is ordinarily stored or parked during non-business hours or when not in use. –MN DOT
        4. Interesting you brought up transit riders. The Northstar for example is running at an $18.90 per ride subsidy. With wheelage tax logic, they should be paying to use it.
        5. We have gas tax, we have levy, precisely why do we need another type of taxation. Having revenue is a two edge sword…..if you have more revenue you can do more projects….with only so many players in the road building business, once capacity is reached, bids go up…you pay more. This is known as a B-2 death spiral

    • Froggie July 31, 2013 at 12:04 am #

      Mr. Look, I’d like to hear your reasoning why you consider “livable communities” and bike/ped to be “failed outcomes”.

      Also, regarding your claim that you “don’t need more money” (your point #2), I offer a simple counter-argument: Main St NE/County Rd 14. Now that your county has taken it over, it’s YOUR responsibility to improve it from the 2-lane mess it currently is, especially in northern Blaine.

      Lastly, regarding the wheelage tax, yes an argument could be made that it’s a “flawed tax”, but it’s still a transportation-based revenue source for transportation. Optimally, the state Legislature would have the gonads to adjust the gas tax and license tabs (the latter should really be based on vehicle weight-per-axle, as that’s the primary measure that impacts how much damage a vehicle does to a road) to the level needed to improve the roads. Since they can’t seem to do that, we need to use what’s left available to us…the wheelage tax being one item.

      • Matt Look July 31, 2013 at 2:44 pm #

        1. Failed outcomes as it relates to smart growth. The jury is still out on the return on investment for “livable communities” and bike/ped complete lanes…..especially in a state such as a Minnesota, with a climate like ours.
        2. County road 14 was a state turnback….you make it sound like a choice. If you were paying attention, we recently invested 45 million into that road. I will need further clarification on where you believe it to be a “mess”. (matt.look@co.anoka.mn.us).
        3. To your “we don’t need the money” response……we were content with $5, but the state could not leave well enough alone. I refuse to implement a 100% increase on my constituents because someone dissociated with Anoka County thinks it would be better? Really? If that doesn’t seem dysfunctional to you, then perhaps you wouldnt have a problem paying $1000 wheelage tax. There is a breaking point for you. When you add up the numbers of vehicles in a household today, add in the boat trailers, four wheelers, motorcycles or scooters (one is exempt) and anything else that wheelage tax applies to….some families will pay in excess of $100. Then keep in the back of your mind, it is ratcheting up to $20 per vehicle. The justification for increased taxation has not end!

    • Alex July 31, 2013 at 12:53 pm #

      Regarding #2: Where is the “savings” coming from? That is, what budget items will be reduced in order to transfer the $1.3m to roads?

      Regarding #3: The trouble with the “everyone uses roads” argument is that if roads were only used by bikes, peds, meals on wheels, groceries/medication deliveries, or ambulance/police response, they would require far less subgrade structure, generally less pavement overall, and less signaling/lighting equipment, and thereby cost much less to build and maintain.

      • Matt Look July 31, 2013 at 2:50 pm #

        Early retirement, 2.5 million annual savings. Paperless, 600K annual savings. Utility restructuring 500K annual savings. County exemption from sales tax, 1.5 million annual savings, reducing the wants out of the capital improvement budget 20-30 million a year (budget would reflect the debt service on bonding). I could go on.
        #3, not true, school buses exceed the tonnage on roads, garbage trucks exceed the tonnage….beet haulers, farmers…and on and on. If you cheat on the subgrade the road, especially in MN deteriorate faster, requiring premature replacement. Less signaling might look similar to downtown Bangkok

        • Alex August 2, 2013 at 10:06 am #

          So you’re cutting staff, shifting costs to other levels of government, and deferring maintenance? Sounds like the sort of thing that might have been considered innovative in Britain prior to 1979…

          Yes, of course a lower quality subgrade will necessitate more frequent reconstruction, but since subgrade is such a substantial part of the reconstruction costs, it still saves money. You can observe this in many rural areas. Remember that the main reason for all that subgrade support is to stop motorists from complaining about a rough ride, and in our scenario those motorists have vanished. Tractor drivers and kids on school buses are probably not going to complain too much about the bumpy road.

          • Nathaniel M Hood
            Nathaniel August 2, 2013 at 10:59 am #

            Regarding the Commissioner’s comments, I have a differing view on how and what government ought to be doing. Government does need to be more efficient and if it’s investing in new computer systems, etc. that save money – I say, all the better. However, expanding on what Alex said above …

            Many of our sticky government financial situations appear to result from deferred maintenance. Pushing off costs to future generations only saves money in the short-run. And, shifting costs (real costs or intangible negative externalities) from one government entity to another doesn’t solve anything (and this goes for MnDOT, too re: turnbacks).

            Of course, in 20 years, I questions whether future leaders will even want to pay for (even if they can afford to) maintaining the 4 to 5 lane exurban roads criss-crossing Anoka County connecting only but couple houses on cul-de-sacs.

            I’m skeptical of the long-term societal benefit of shifting from standard pensions to 401(k) retirement plans; and, of course, the elephant in the room: health care (which I’m not going to touch). Putting future retirements to the will of Wall Street and the stock market, in my opinion, seems unwise. Have pension programs been too generous. Sure. There are examples of insane pension schemes (e.g.: California); but that doesn’t mean it is necessarily a bad system. I mean, if an employee wants to start their own 401(k), etc. or invest in the stock market- go ahead! However, banking an entire agencies future retirement on a guy pulling a commission at Morgan Stanely?

          • Matt Look August 3, 2013 at 10:41 am #

            Alex, if you are implementing technology that creates more efficiency and doesn’t require as many to staff, would it not be wise to cut staff? Not sure where you are getting the shifting costs to other levels of government. The state, I know, would fit that criticism, however, nothing I’ve mentioned above shifts costs, unless you are referring to the revenue the state collected on public infrastructure expenditures in the form of sales tax. Government taxing government, is really just another form of hidden tax. The state chose to restructure that and yes, it does represent a savings to us. As to capital improvements, you are making the assumption they are needed. We clearly separate the “needs from the wants”. It was the wants that led to unnecessary bonding….”I’d like a new_______” fill in the blank. Wasteful spending was eliminated from the budget. As for the capital improvements that preserve our infrastructure, (ie buildings, roads, fleet management)….something by the way that if you skimp on, your credit rating will be reduced as a result of, we have invested to levels not yet seen at the county. The outcome, we got a bump in our credit rating.
            I know the assumptions you have made are based on the limited area to explain in full detail all the ins and outs…..hard to give full detail in a few short sentences.
            Hopefully this clarifies for you

  5. Sam Toberman July 30, 2013 at 12:31 pm #

    Nate, I can see Anoka County only spending $8M/yr on maintenance. Anoka county, although large, has many smaller municipalities that maintain their own roads. Additionally one of the major thoroughfares US-10 is a federal road. My assumption is that the rural roads are maintained by the local cities, or, frankly, under-maintained.

    • Froggie July 30, 2013 at 11:55 pm #

      (partial repost from my comment on Nathaniel’s blog, tailored to reply to Sam)

      Indeed. Per MnDOT figures, Anoka County has ownership over about 416 miles of road in the county, out of a total of 2,364. 307 of that is state-aid. The single largest road owner(s) in Anoka County (and true of most urban/suburban counties in the state) are the municipalities.

      Also a minor quibble: US 10 is not a “federal road”. Contrary to popular belief, the US routes are not “federal routes”. They are for all intents state routes that are considered (at least at the time of their creation) major routes and are marked with a uniform shield and maintain the same number across state lines. Unless Federal highway funds are used for maintenance and construction, the Federal Highway Administration has no jurisdiction over the US routes. The US routes, as with the state routes, are MnDOT’s responsibility.

      In Minnesota, unless the road is a state (or US or Interstate) highway route or a designated county route (state aid or not), a given road falls under the local municipality or township for responsibility and maintenance. This doesn’t hold true nationwide, as there are many states (particularily in the Southeast) where every non-state road is a county road, and there is one state (Virginia) where the state has responsibility over almost ALL roads (there’s a few exceptions).

  6. Nathaniel M Hood
    Nathaniel July 30, 2013 at 4:30 pm #

    Thanks for all the comments everyone. I’m working on a rebuttal, or better yet, it’s a sales pitch to Commissioner Matt Look. While I disagree with him, I have to give him credit for replying and stating his case. Not many politicians do that. In fact, on Streets.MN it’s just him and Cam Winton (that I’m aware of). Best -Nate

    • Matt Look July 31, 2013 at 2:53 pm #

      Its been fun. Keep an eye on Anoka County…..we’re blazing new trails. Its not government as usual. Combine the levy reduction, with massive repayment of debt, cash in lieu of bonding, paperless/document imaging, condition of our infrastructure superior to most counties, fastest growing region in the state. Quite simply, we’re open for business

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