Mirror Check: “What happened with trailer fees and vehicle sales taxes?”

What’s this trailer fee hike all about?

One of the most common questions I get in my constituent services office is about the trailer fee increase and vehicle sales tax increase.

The Trailer Fee Hike wasn’t negotiated as part of the Governor’s capital plan, despite it being included in final bill language in 2019. Some legislators said they were told it was a drafting error, but it has led to as many as 150,000 fewer trailer plate renewals and needed to be addressed because people can’t afford it.

What’s the impact of the fee hike?

The Illinois Secretary of State’s office Thursday said on May 3, 2019, there were 332,444 trailer registrations. That dropped to 145,893 in May of 2020, during the state’s stay-at-home orders from the governor. As of April 30, 2021, the Secretary of State said there were around 325,200 registered trailers. At $118 per plate, that equates to nearly $38.4 million. 

The fee is impacting everyone from motorcyclists to nonprofit groups like scout troops and recycling clubs. Over the past two years, at least nine identical bills from Republicans and Democrats had been filed to decrease the trailer fee that was increased in the Governor’s capital bill enacted in 2019.

Was action finally taken to reduce the fee this Spring?

You may have seen in the news recently that, finally, after years of efforts, the fee to register your trailer in Illinois has been reduced from $118 down to $36. I supported this legislation, but also want you to know the full picture.

What you may not see in this coverage is that this “reduction” is still a 100% increase over the $18/year price prior to 2019. You may also want to be wary of the fact that this reduction only applies to trailers that carry small items (3,000 pounds or less), such as boats and riding lawn mowers. A negotiated bill process led to the reduction in trailer fees, but also increased other fees to make up the revenue in the capital plan.

What else was included in the bill?

Accompanying this reduction is a title fee increase of $5 for vehicles other than all-terrain vehicles, off-highway motorcycles, motor homes, mini motor homes, and van campers from $150 to $155, with additional funds to be deposited into the Road Fund. Motor Vehicle title fees had already increased from $90 to $150 as part of the Governor’s capital bill enacted in 2019.

Senate Bill 58 also repealed the $10,000 cap on exclusion from sales tax when you trade in your vehicle at a dealership as well as increasing taxes on private vehicle sales. Before January 1, 2020, the total amount/value attributed to a used vehicle being traded-in to the dealer at the time of purchasing a new vehicle may be deducted from the price of the new vehicle for purposes of applying sales tax. The amount was capped at $10,000 in 2019 as part of the capital bill.

Where does this money go?

Increased title fees are estimated to generate $8 million per year to the Road Fund. Funds deposited into the Road Fund are protected for use on transportation projects by the Illinois Transportation Taxes and Fees Lockbox Amendment enacted in 2016.

The Commission on Government Forecasting and Accountability estimates the auto tax changes in SB 58 would decrease revenue to the General Revenue Fund between $30-40 million per year, while revenue to the Build Illinois Fund would increase by approximately $35 million.

What’s next?

Your voice was heard! Senate Bill 58 passed both chamber unanimously and has been sent to the Governor for his action to enact or veto the legislation.

UPDATE: The legislation was signed into law in August 2021 by the Governor and is effective January 1, 2022.

Learn more about this and other legislative issues at repmccombie.com.