Governor Dayton and the legislature raised taxes by more than $2 billion this year, but in reality the tax damage may be significantly worse. That’s because several provisions included in end-of-session bills enable local governments to impose new taxes and increase taxes more easily, all with a minimum of public input. These are the indirect tax increases of the 2013 session. For example, school boards may now “convert up to $300 per adjusted pupil unit of referendum authority from voter approved to board approved by a board vote.” In other words, school boards may now vote to deprive you of your right to vote. The legislature also granted permission to counties to levy a half-cent local retail sales tax for transit and transportation projects. And, for the first time ever, all 87 counties are permitted to impose wheelage taxes. Previously, only counties in the seven-county metro area were allowed to levy the tax (Anoka, Carver, Dakota, Scott, and Washington imposed the tax).
The wheelage tax is tacked on to annual license tab renewals. The new law increases the previous cap of $5 per car or truck per year to $10 each year through 2017, and $20 thereafter. The Minnesota Transportation Alliance estimated the tax would raise $46.8 million if all 87 counties adopted it. The Association of Minnesota Counties provides a summary of how the tax revenue may be used:
· Payment of the capital cost of a specific transportation project or improvement;
· Payment of the costs, which may include both capital and operating costs, of a specific transit project or improvement;
· Payment of the capital costs of a Safe Routes To School program; or,
· Payment of transit operating costs
According to the Freedom Foundation of Minnesota’s review of recent county board actions, at least 23 counties have already voted to impose wheelage taxes in 2014, with total annual projected revenue of approximately $24.9 million. Several other counties appear likely to adopt the tax before the deadline of August 1.
Among the counties planning to levy a wheelage tax: Hennepin, Ramsey, Sherburne, Rice, Chisago, Beltrami, Itasca, and Clay. Several other counties appear poised to pass the tax in the next two weeks, and four of the five counties currently collecting the tax plan to extend it (only Anoka County is considering rescinding it altogether). Also expect at least a few counties to opt for the half-cent sales tax increase in the near future.
Hennepin County, where the tax will be imposed for the first time, will rake in $8.6 million per year. Hennepin County Commissioner and Board Chairman Mike Opat, who voted against the tax, said: “I’m disappointed that we feel the need to go to this extent just because it’s available. The poor pay more.”
It is also worth noting that wheelage taxes are not the only boon for counties from the 2013 session. Counties also gained exemption from the state sales tax, and counties in Greater Minnesota may now levy a half-cent local-option sales tax for transportation and transit. Perhaps most significantly, the public has little say in the matter, as both the wheelage tax and the sales tax can be imposed without a public referendum. In fact, in Mower County, commissioners recently passed the wheelage tax without even placing the issue on their meeting agenda.
While these are ostensibly local tax decisions made by local officials, Governor Dayton and the legislature are every bit as responsible for them as county commissioners. These are the aftershocks of the destructive and out-of-touch 2013 legislative session, and they show no sign of letting up.