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Erik Burgess, Published July 26 2013

New $10 per vehicle 'wheelage tax' starts Jan. 1 in Clay County

MOORHEAD – Come Jan. 1, drivers here and across Clay County will be required to pay a new $10 fee when they renew their license tabs.

The so-called “wheelage tax” was passed unanimously by Clay County commissioners on July 16 in an effort to bolster the county’s road repair funds.

Of the 87 counties in Minnesota, 40 have passed the new wheelage tax, which has been available to the seven-county Twin Cities metro area since the 1970s. It was approved this year by the Legislature for statewide use.

Counties have until Thursday to inform the state that they have passed a wheelage tax if they want to institute the new charge next year, said Julie Ring, legislative coordinator for the Association of Minnesota Counties.

Ring said the tax in Clay County could draw in an estimated $460,000 a year.

The only other North Dakota/Minnesota border county to pass a wheelage tax is Polk County, according to Ring’s notes. She estimated the tax would earn Polk $300,000 a year.

The Association of Minnesota Counties pushed hard for the wheelage tax, Ring said.

“I think every county in Minnesota would say that they do not have adequate funding for their transportation system,” she said.

The Moorhead Business Association opposes the wheelage tax because of how it can negatively affect business growth, said Executive Director Chuck Chadwick.

“It’s just not a good idea,” he said. “Even though it’s ten bucks, (we’re) so sensitive to North Dakota competition."

Ring and Clay County Administrator Brian Berg said the counties need more options for gathering funds to keep roads up to snuff. In Minnesota, the only revenue source counties have is property taxes, Ring said.

“There’s been a lot of pressure on property taxes, a lot of discussions of ways to relieve propriety taxes, and so from our perspective this gave counties another option for revenue for those roads,” she said.

Funds from gas taxes, which are collected by the state and then doled out to counties, aren’t as reliable as they used to be as cars become more fuel-efficient, Berg said.

“(A wheelage tax) builds their roadway system for the good of the farming community and the commuters that we have out in the county going back and forth to work,” Berg said. “Their roads are very, very important to them. It’s their livelihood.”

Berg said the wheelage tax will apply to each licensed vehicle, meaning some farmers could be on the hook for multiple machines.

“But think of the road use that they do, too,” he said.

Clay County commissioners voted on July 16 to set aside 30 percent of the wheelage tax funds into a reserve for the cities.

Those details are yet to be worked out, Berg said, but essentially any city in the county planning a road project could apply for money from that fund.

There are some exceptions to the wheelage tax, Ring said, including motorcycles and mopeds, trailers and semitrailers, vehicles not subject to annual registration such as antique vehicles, tax exempt vehicles and state-owned vehicles.

Owners of licensed vehicles stationed in the county will pay the tax when they renew their tabs, even if the vehicle was licensed in another county, Berg said.

Readers can reach Forum reporter

Erik Burgess at (701) 241-5518