Bill would block nonresident road fees
Cities and villages would be prohibited from requiring nonresidents to pay a city motor vehicle registration fee under a bill receiving a hearing from the Revenue Committee Jan. 20.
LB81, introduced by Bellevue Sen. Abbie Cornett, would prohibit metropolitan class cities from levying a motor vehicle registration fee on nonresidents. All cities and villages also would be prohibited from levying a license or occupation tax on nonresident motor vehicles.
The bill would confine municipal licenses or occupation taxes on individuals and businesses to those within city limits, although Cornett said she plans to offer an amendment to remove those provisions.
Cornett said the intent of her bill is to prohibit cities from charging nonresidents a motor vehicle registration fee similar to Omaha’s commuter wheel fee. A new Omaha ordinance requires nonresidents who drive to work in Omaha more than 30 times per year to pay the $50 fee, which is collected by their employer and – after subtracting 4 percent for processing – remitted to the city.
Dacia Kruse, representing the Greater Omaha Chamber of Commerce, testified in support of LB81. She said collection of the commuter wheel fee is impractical due to its reliance on businesses to remit fees from their employees. She said most businesses have no means to identify each employee’s residence, record the number of times he or she travels into the city and deduct the fee.
Kruse said the fee is almost impossible to implement and ambiguities exist regarding who is liable — employees or employers — for non-payment. Furthermore, the fee makes Omaha less competitive for jobs and investment, she said.
Sarpy County resident Gregory Boyle also testified in support of LB81. While a person can easily choose to patronize an Omaha restaurant and therefore pay city sales tax voluntarily, he said, an unfavorable economic climate makes it difficult for one to change his or her employment to avoid the commuter wheel fee.
In addition, Boyle said, people who are paying the commuter wheel fee have no political effect on Omaha city government.
“The Omaha wheel tax is clearly taxation without representation,” he said.
Tom Mumgaard, deputy city attorney for the city of Omaha, testified in opposition to the bill. He said the commuter wheel fee is a user fee that is tied to the benefit it provides in that proceeds from the fee are directed to roads projects. He said this same principle is carried out in the state motor vehicle fuel tax, which funds roads.
“The city limits don’t determine who causes the need for street construction or street repair,” he said, “and those city limits shouldn’t determine who pays for the expenses.”
Pam Spaccarotella, city finance director for the city of Omaha, also spoke in opposition to the bill. The Omaha vehicle registration fee is the main source of revenue for city roads, she said, and nonresidents make up a substantial portion of people who work in the city. Of the 271,156 primary jobs in Omaha, she said, only 151,331 are held by residents.
Cornett said the city should not look to those outside its limits to fund its roads. The city of Omaha appropriates only motor vehicle fuel tax revenues and its motor vehicle registration fee for road funding, she said, while other municipalities devote sales tax and property tax revenues to their roads.
“Why do they expect the communities around them to fund their roads?” she asked.
The committee advanced LB81 to general file on a 7-0 vote.
