Some truckers in Illinois told they must pay new fee or their plates are no good
Truckers in Illinois are reeling after receiving notices from the state that they must pay additional fees – some more than $1,000 – to keep the plates they already paid for this year.
The additional money – called a Commercial Distribution Fee – was passed earlier this year as part of SB841. The law requires every owner of a truck over 8,000 pounds to pay a fee equal to 36 percent of his or her Illinois registration fee. The law called on truckers to pay the fee “for each registration year.”
But many truckers were caught off guard when they received letters around the first of October saying they owed the fee for this year, even though they already have valid plates.
All truckers eventually pay
Although only in-state truckers are being charged now, the new fee applies to all truckers who travel in Illinois, officials at the Secretary of State’s Office said. Like other registration fees, it is apportioned based on the percentage of a trucker’s total miles that are traveled in the state.
The apportionment is handled by the International Registration Plan, or IRP, a reciprocal interstate compact that regulates payment of fees to states by truckers.
Letters spread rampant confusion in trucking community
The letters sent to truckers throughout Illinois have sparked considerable anger among truck owners, but even more, it has left them confused.
In part, that is because the letters do not make it clear what the charge is, who will pay it, and when.
One trucker contacted by Land Line, having seen one of the letters, thought the Commercial Distribution Fee was an additional cost on top of the 36 percent increase in registration fees in Illinois. According to state officials, the Commercial Distribution Fee is the name given to the 36 percent increase.
"The way everyone is understanding the letter is that what you paid last year for plates, combined, is going up 36 percent from last year,' the trucker said. "To be honest with you, I don't know if I can do it - I don't know if I can come up with the $1,000 to put out."
That trucker, who saw a friend’s copy of the letter, will not pay the full $1,005 Commercial Distribution Fee – since he has IRP plates, he will pay an apportioned percentage based on his mileage in Illinois, just as he does with other state registration fees.
Beth Kauffman, spokeswoman for the Illinois Secretary of State’s office, said the recent letters and bills were sent to in-state Illinois truckers who have flat weight or mileage-tax based plates.
According to the letter, truckers who receive the bills must pay the fee by Nov. 1. Not paying “may result in revocation or suspension of your vehicle registration.”
However, Don Kerber, legislative liaison for the Vehicle Services Department of the Secretary of State’s Office, says that does not apply to any truck owner who has IRP plates. They should not receive a bill at this time.
Truckers with IRP plates “are on a different renewal cycle” than in-state trucks, Kerber said. “The law was not even effective when their registration year began.”
IRP plates are purchased for 12 months beginning April 1, while the year for in-state plates begins July 1 – the effective date of the bill. That’s why in-state truckers must pay the additional fee to keep their current plates.
"They should not be getting a bill for anything they renewed in April," Kerber said. "The only thing they are being billed for is any changes they made to their fleet after July 1."
What Illinois wants you to pay
Cathy Koncilia of OOIDA’s Business Services division said the registration fee for a truck that runs all of its miles in Illinois was $2,790 last year. The new Commercial Distribution Fee would add $1,005 to that figure, brining the total fees paid to the state to $3,795.
Truckers who run only part of their miles in Illinois would pay less, based on their miles in the state.
OOIDA and Land Line have received reports of fees as low as $50, several truckers who are being charged about $750, and a number who are facing the full $1,005 charge. Under the new law, the fee should be the equivalent of 36 percent of a truck’s current registration fee.
The fee increase was contained in a bill that was already controversial. State officials in Illinois had proposed earlier this year eliminating the state’s sales tax exemption for rolling stock. SB841 kept that exemption, state officials toldLand Line, for any truck that paid apportioned IRP fees.
The bill also contained a bonus for some trucking companies. The firms will receive a $50 tax credit for every employee who is a resident of Illinois and who drives a truck.
But that benefit has not dulled the sharp reaction of truckers to the higher fees contained in the bill.
"I'm an owner-operator, I only have one truck," OOIDA member and owner-operator Glen Sonntag, Marengo, IL, said. "I'm leased on with a company. To me, to give me a $50 tax credit for everyone I hire, it wouldn't do me any good."
Making the fee even harder to bear for some is the fact that it won’t be spent on highways or other issues important to truckers. The money, according to the text of the bill, is destined for the state’s general fund, where it will help solve Illinois’ running budget crisis.
Victims of a budget crisis
Todd Spencer, executive vice president of OOIDA, said that truckers are the victims of a budget crisis that has swept virtually every one of the 50 states.
"The reality is in Illinois and most other states, budgets are squeezed," he said. "State lawmakers are doing everything they can to find ways to bring revenue in."
"Truckers are certain right to feel they're being singled out for higher fees," Spencer added. "While we may work in a very large industry, when it gets right down to it, when lawmakers want money, they're going to get it somewhere, and most prefer to do it where they anger the fewest people."
Spencer said the solution for truckers lies at on the compensation end of the industry. That, he said, is where they must focus their efforts.
"While tax treatment, whether fair or unfair, is an economic burden, the challenge that all truckers have to focus on is finding ways to offset the cost," he said, "finding ways to pass those costs along by setting a rate that will provide a reasonable return."
The Business Services division at the Owner-Operator Independent Drivers Association has received several calls from truckers upset about the new fee.
Some truckers are upset about the size of the bill. Fees have gone up in several states, so even truckers with apportioned IRP plates could see significant hikes.
"It's just getting to be so much in Illinois with all those additional fees that our governor's putting on everything," Sonntag said. "He's basically hitting the trucks the hardest.
"According to him, they make the most money and they damage the roads the most," he added. "He's going after the trucks more than anything."
Who ya’ gonna’ call?
Land Line and OOIDA received some reports that truckers with IRP plates were receiving bills for the new Commercial Distribution Fee in Illinois, even though those truckers should not face the charge until their plates renew.
Officials with the Secretary of State’s office have a place those truckers can call to report an incorrect billing.
Don Kerber, a legislative liaison with the secretary’s office, said Truckers who have IRP plates renewed in April who have not made changes to their operations of fleet since July 1, but who have received a bill, should call Mick Ramirez, who is in charge of IRP matters for Illinois, at (217) 785-7197.
However, Beth Kauffman, a spokeswoman for the Secretary of State, said if truckers are in-state – and therefore owe the tax now – they should not call the IRP office.
Truckers who do owe but still want to lodge a complaint about the fee should instead call the governor’s office or their legislator.
The new fee and collection policy, Kerber and Kauffman said, was set by the General Assembly and signed by the governor; the Secretary of State’s office and IRP office are only carrying it out, and cannot change the policy.
"We're just the messengers," Kauffman said.
To contact members of the Senate, call (217) 782-4517; to contact members of the House, call (217) 782-8223.
Many truckers don’t understand what the fee is for, Koncilia said. But more common are questions about timing.
"They can't understand how they can make them pay this going retroactive back to July 1," she said. "They were under the impression from something or misunderstood that this would take place upon renewal date rather than something immediate."
Although many truckers have complained that the fee is retroactive – charging them more for plates they purchased earlier in the year – state officials say it is not, even though the fee notices arrived three months after the purchase date for in-state plates.
Kauffman said because the governor signed the bill at the end of June, the Secretary of State’s Office was not able to react quickly enough to get the bills out by July 1, when the fee should have been charged.
"They impose these fees, and we're in charge of receiving the funds," Kauffman said. "The governor signs a bill and then we have to react.
"We couldn't just react in one day. It took us that long to get everything up and running . it took a lot of programming . to get the system up and ready to go."
An exodus from the Land of Lincoln?
Trucking industry officials had predicted that if SB841 passed, it would likely cost the state jobs. And that seems to be happening, just days after the letters started coming out.
The St. Louis Post-Dispatch reported Sept. 30 that a number of companies in Illinois were reacting to the new fees by moving their operations to neighboring Missouri. The address change for one company, Henderson Trucking Co. of Salem, IL, will cost the state 500 jobs and roughly $15 million in payroll, the newspaper reported.
Henderson had faced $100,000 in additional fees.
Owner-operators, who often work on a thin margin, are up in arms as well.
Koncilia said one trucker she spoke with said he was considering moving his operation to Wisconsin, while another trucker calling OOIDA said he was considering a move to Iowa.
OOIDA member Sonntag is among those who may make the move.
"I've already been talking to my wife about it," he said. "I've seriously thought about moving out of Illinois. My wife even says that when my daughter's out of high school - she's a senior - we can seriously think about doing that, because she's getting tired of it also, with everything going up."
This one’s not over yet
Some of the bill’s initial opponents are still intent on stopping the new fee. The controversy that arose since bills began arriving has emboldened them to move ahead with that effort.
One of the legislators who voted against the bill, Sen. John Sullivan, D-Rushville, told The Herald-Whig that some members of the Senate did not know when they voted for the measure that truckers would start paying the fees as of July 1.
"The more you examine it, the worse it looks," he told the newspaper. "It was a close vote when it passed last spring."
The bill passed 32-16 in the Senate and 62-54 in the House.
"We're sure going to try to get it overturned," he added, "now that people see how bad this is."
--by Mark H. Reddig, associate editor
Mark Reddig can be reached at email@example.com.