McLeod County's wheelage tax is gone, and starting Jan. 1 it will be replaced with a half-percent sales tax on nonessential items.

The wheelage tax kicked in at the beginning of 2014 in response to an option allowed by the state to cover growing transportation expenses. It was collected when county residents registered their vehicles each year and garnered $385,000 annually to assist with road maintenance. The wheelage tax was repealed last month by County Board members.

The sales tax approved unanimously Tuesday will cost consumers 50 cents on a $100 purchase. It will not apply to food, clothing, agriculture production items and essential items. A University of Minnesota Extension study predicts it will raise $1.9 million annually, moving the county closer to closing a $3 million annual funding gap from the state aid system to help maintain highways. The gap is larger when county roads are taken into account. 

In a presentation, McLeod County Public Works director John Brunkhorst said the county has more than 150 miles of substandard paved roads. The cost to tackle those projects, including addressing narrow shoulders and steep inslopes, would be $225 million. That figure does not include 100 miles of gravel roads.

"We're trying to find realistic solutions to a very difficult problem of keeping our roads up to par so their safety ... is where it needs to be," said Board Member Rich Pohlmeier.

A few roads in need of reconstruction, and the cost of the work, includes:

  • County State Aid Highway 16 from State Highway 7 to Wright County ($9 million)
  • County State Aid Highway 10 from County State Aid Highway 2 to Carver County ($11 million)
  • County State Aid Highway 5 from County State Aid Highway 16 to County State Aid Highway 1 ($13 million)
  • County Road 57 from County State Aid Highway 17 to U.S. Highway 212 ($7 million)
  • County Road 61 from County Road 79 to County Road 60 ($7 million)
  • County Road 81 from Sibley County to U.S. Highway 212 ($5 million)

"With only a few miles of road it goes from hundreds of thousands of dollars to millions to make a difference," said Board Member Paul Wright. "That's the way it goes with today's values and prices."

Maintenance and repair adds additional costs.

Board Member Doug Krueger says he favors the sales tax over the wheelage tax, as it spreads the burden out to everyone who benefits from the commerce the roads bring into the county, and doesn't add a larger burden for families whose work or needs may require they own multiple vehicles. A University of Minnesota Extension study based on consumer trends noted visitors to the county would likely account for a third of the revenue generated by the sales tax.

State statute caps the sales tax at 0.5 percent, and allows local control of the money garnered. The law does not allow counties to add any additional taxes for other expenses.

Two county residents spoke against the sales tax.

"Business owners, whether small business or agriculture, are going to pay an awful lot of this," said Steve Reiner of rural Hutchinson. "I think there have been an awful lot of wants taken care of. I think maybe we need to narrow back to the needs. I don't disagree that we need to improve a lot of roads, but I think we need to look at all projects ... a little bit closer."

He noted that taxes were adding up with local schools looking to update aging facilities and renew operating levies. 

Building materials will account for the largest portion of taxable retail and service sales, at 22 percent, according to the University of Minnesota Extension study. General merchandise stores such as department stores, superstores, dollar stores and variety stores will account for 18.9 percent of taxable retail sales, followed by 13.2 percent from restaurants, bars and similar services.

Before the vote, Krueger said 10 years ago he would have had to pinch himself if he thought about counties working on economic development.

"But there is a need," he said. "When I talk to people (and ask), 'Why aren't you building your home in McLeod County?" they want better roads. You talk to the townships, they cannot afford to build a road. They want them built to county standards because of safety ... (but) the costs are so high."

He said the price of bad roads blows back on farmers who have to pay the high cost of repairing heavy vehicles. Earlier in the meeting, he noted that in years past the county's needs had been kicked down the road, leaving the Board to catch up now.

"It's not easy to do this, but I don't know how to keep up," Krueger said. "The wants and needs were commented on. Believe me, I tear myself up on wants and needs."

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