Bill prohibiting nonresident city motor vehicle registration fees debated

Those living outside a city or village could not be charged the municipality’s motor vehicle registration fee under a bill debated on general file Jan. 27.

LB81, introduced by Bellevue Sen. Abbie Cornett, would prohibit metropolitan class cities from levying a motor vehicle registration fee on nonresidents. Cities and villages also would be prohibited from levying a tax on nonresident motor vehicles.

As introduced, the bill would limit municipal licenses or occupation taxes only to those businesses and individuals living within city limits. This provision would be removed by a pending Revenue Committee amendment.

Cornett said the committee amendment would narrow the scope of the bill to only the imposition of motor vehicle registration fee on nonresidents. She offered an ordinance enacted by the city of Omaha in 2010 as an example of such a fee.

The Omaha ordinance requires individuals to pay a $50 fee if they use their vehicle more than 30 times a year to travel to their place of work within Omaha. The fee is collected and – after subtracting 4 percent for processing – remitted to the city by their employers.

Lincoln Sen. Tony Fulton spoke in support of the bill, saying commuters do not have the ability to vote for the local authorities who institute motor vehicle registration fees. While he conceded that a local option sales tax also is levied on nonvoters, he said people can freely choose whether to purchase a product or service.

“There’s quite a difference between being able to exercise one’s free volition in making an expenditure,” Fulton said, “versus having one’s paycheck docked for a wheel tax.”

Cortland Sen. Norm Wallman said the Omaha motor vehicle registration fee on nonresidents is similar to property taxes levied by a school district on land owned by farmers who do not live in the district and, therefore, do not get to vote for school board members.

Hastings Sen. Dennis Utter said LB81 is needed to avoid a patchwork of motor vehicle registration fees. If the bill is not enacted, he said, families in the tri-city area of Kearney, Grand Island and Hastings could pay multiple motor vehicle registration fees if spouses work in different cities and each municipality adopted its own fee.

“We would have families paying … more than two wheel taxes because they may have children who are still at home who work in another one of those communities,” Utter said.

Omaha Sen. Brenda Council spoke in opposition to the bill, saying it would change 50 years of state policy that permits cities to tax motor vehicles owned or used in the city. She said such taxes are user fees because their revenues are deposited only in roads funds.

Objecting to the timing of the bill, Omaha Sen. Brad Ashford called for the Legislature not to enact LB81 in the middle of a city budget. It if is enacted, he said, Omaha’s fiscal woes should be a reason to delay the bill’s Jan. 1, 2011, operative date.

“To take away the ability to raise revenue in a relative crisis … is inappropriate and is not for this body to engage in,” Ashford said.

The Legislature adjourned before voting on the committee amendment or the advancement of LB81.