Bill to reduce registration surcharge now law in Illinois

| Tuesday, September 07, 2004

Illinois will gradually reduce the Commercial Distribution Fee – a 36 percent surcharge placed on truck registrations in the state last year – now that Gov. Rod Blagojevich has signed HB714, a bill to lower the fee, into law.

Under the bill, signed by the governor Sept. 3, the Commercial Distribution Fee would remain a 36 percent surcharge on registration fees until July 1, 2005, when it would drop to 21.5 percent. It would drop to 14.35 percent beginning July 1, 2006.

“Passage of this legislation gives the industry some light at the end of a long, dark tunnel,” Don Schaefer, executive vice president of the Mid-West Truckers Association, said in a statement. “The past year has truly been negative for the Illinois trucking industry.”

Last year, a new law – passed as SB841, signed by the governor June 20, 2003 – created the Commercial Distribution Fee and changed the rolling stock exemption.

The measure was perhaps the most talked-about trucking-related measure in the state in recent years. A number of trucking companies and individual owner-operators in Illinois have told Land Line the fee drove them to either close their doors or leave the state.

The fee was created when the state was in the midst of a budget crisis, with state coffers running millions short. But it quickly became apparent that it was having a detrimental effect on the trucking industry.

Earlier this year, figures from the state – made public by the Mid-West Truckers – showed that the number of IRP-registered trucks has dropped by nearly 17,000 since last year in Illinois. Truckers and others attributed the drop to the Commercial Distribution Fee.

Several bills have been introduced since then to reduce the fee, some introduced mere weeks after the fee became law. Until now, none had been successful. But on July 24, one of those measures – HB714 – and its various amendments received the last necessary approval from the General Assembly and was sent to the governor’s.

HB714 does not either fully restore the rolling stock exemption or completely eliminate the Commercial Distribution Fee.

It applies the new rolling stock exemption – essentially, exempting tractors and trailers from sales tax – to vehicles more than 16,000 pounds that are used in interstate commerce at least half of the time during the past year. The new law defines half as either 50 percent of its trips or 50 percent of its miles, and lets truckers choose which method to use.

In addition, truckers whose shipments either start out or end up outside of the state – such as grain haulers, port container carriers and others – would also receive the rolling stock exemption.

If opponents of the Commercial Distribution Fee have their way, it may disappear completely in an upcoming session of the General Assembly.

Mary Shaw, a spokeswoman for Sen. George Shadid, D-Pekin – the chair of the Senate Transportation Committee and a co-sponsor of HB714 – said the senator would like to end the fee. “It will basically depend on the budget,” she said.