Ventura's plan for license tab cuts clears crucial hurdle

ST. PAUL -- Despite several misgivings, House and Senate tax writers on Saturday adopted Gov. Jesse Ventura's plan to cap all vehicle registration fees at $99 once a car is three years old.

House Tax Chairman Ron Abrams and Senate Tax Chairman Doug Johnson grudgingly backed the proposal to honor a three-way budget split that gave the House, Senate and Ventura $175 million to spend as they wish. By incorporating it in a broader tax bill, the plan is virtually a sure bet to become law. Minnesotans would realize the first cuts in July.

But Abrams, R-Minnetonka, cautioned that if the economy turns sour and car sales dip, funding for roads will suffer. That's because registration fees fuel a special transportation account and Abrams said there's no guarantee the amount Ventura appropriated for the cuts will suffice.

''In the end of the day, the highway trust fund is not protected fully,'' he said.

He referred to an analysis by House aides that shows that the loss to the fund eventually will hit 7.7 percent a year. But the growth in vehicle sales taxes will level off at 3 percent.

Under Ventura's plan, vehicle buyers would pay the same as they do now to register brand new cars in the first year. The rate would drop to $189 in year two and $99 in year three. After a car turns 11 model years old, the rate bottoms out at $35.

Currently, registration fees are assessed based on a formula that uses the age of a vehicle and its estimated value.

Revenue Commissioner Matt Smith figures the cuts will cost the highway account about $150 million the first year, $162 million the second year and $174 million the third year. Ventura's plan transfers money from the general treasury in the first two years to shore up the highway fund.

After 2002, the proposal would require that 32 percent of all car sales taxes go into the highway fund.