LINCOLN — The City of Omaha has mailed out nearly 1,700 refunds of the city's wheel tax that were mistakenly charged this year and in 2011 to some residents who live outside the city's three-mile zoning area.
The mailings, which began Oct. 12, fulfill a pledge to correct the error that developed after the Nebraska Legislature passed a bill in 2011 restricting who had to pay the $50-a-year motor vehicle registration fee.
Prior to enactment of the law, the wheel tax had been assessed on vehicle owners who lived in a taxing district — like a sanitary and improvement district — that had a majority of its area within the three-mile zone, or the extraterritorial zoning jurisdiction.
But the 2011 law drew a brighter line on who got taxed and who didn't, barring the wheel fee for anyone who lived outside the three-mile zone.
State Sen. Beau McCoy, who lives in the extra zoning area, passed along to the city a constituent's complaint pointing out that motor vehicle owners outside the zone were still being assessed the wheel fee. That led the city to approve the refunds earlier this fall.
McCoy said he wished the city had moved more quickly, but he was happy a wrong was being righted.
“It's not a whole lot of money to each taxpayer, but in this day and age, guess what? Fifty dollars adds up,” McCoy said.
Deputy City Attorney Tom Mumgaard said that 1,078 checks were mailed beginning on Oct. 12 for 1,688 vehicle registrations. Most of the refund checks were for $50, though owners of multiple vehicles could get more.
Mumgaard said those who believe they deserve refunds but didn't get checks should call the City Finance Department at 402-444-5416. The most likely reasons for someone not getting a check, he said, would be that the person's address has changed since the vehicle was registered, or the vehicle was registered after the city compiled a database in late August of those who were owed refunds.
Mumgaard said anyone who registered a vehicle in the last three or four months of 2012 will get a refund check later this year or early in 2013. The refunds are expected to total about $90,000.
After Jan. 1, residents in the zoning area won't have to worry about paying a wheel tax. The passage of Legislative Bill 81 in 2011 limits Omaha's ability to levy the fee only to residents living within its city limits.
That bill was passed amid a controversy over a proposed “commuter tax” by the City of Omaha that extended the wheel fee to all commuters who worked in Omaha — even those living in Sarpy County, other nearby counties or out of state.
Residents of the three-mile zone had been paying the fee since 2006, but some state senators, including McCoy, argued that was unfair taxation without representation.
An Omaha attorney, Ralph Peppard, filed a lawsuit in 2011 making the same argument and seeking a refund for all residents living within the extra zoning area. That lawsuit is pending in Douglas County District Court.
Among Peppard's other arguments: Residents in the three-mile zone were being treated unfairly, because Sarpy County residents who live within three miles of Omaha aren't taxed.
Mumgaard said the city has a “rational basis” for levying the vehicle registration fee on those living just outside its city limits: they likely use Omaha's streets as much as residents, and should pay their fair share of the maintenance costs through the wheel tax.
LB 81, he said, stopped Omaha from levying the fee on Sarpy County vehicle owners.
“We tried to treat everyone equally based on the probability that they were using the streets,” Mumgaard said. “And the Legislature took that away. If there is any unequal treatment, it was caused by the state of Nebraska.”
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