A legislative panel on Thursday endorsed a central Indiana mass-transit funding plan that could mean a tax increase for residents and businesses, and require approval from local officials and voters.
The Central Indiana Transit Study Committee voted 12-1 for a proposal that its chairwoman – Sen. Pat Miller, R-Indianapolis – called a “concept” rather than legislation. It would allow counties to impose a tax on corporations and a local income tax on residents, but would also require that fares paid by bus riders fund at least a quarter of the system’s operating costs.
The proposal does not address what kind of mass-transit system could be developed.
“We’re trying to leave the decisions to local government,” Miller said. “The vast majority of the people on the committee felt that we would not dictate to local units of government, that we would give them the wherewithal to make their decisions and leave it to local governments to design their plans.”
Miller said the proposal will be fleshed out before the 2014 session, when she and Sen. Brent Waltz, R-Greenwood, will introduce it as a bill.
Ron Gifford, executive director of Indy Connect Now, a coalition pushing for expanded mass transit in central Indiana, called the proposal a “very constructive framework” for starting the legislative process.
He said it is somewhat similar to a proposal approved earlier this year by the Indiana House. The Senate amended that bill to order a study of the issue in advance of the 2014 session.
“There are a few new ideas we have to look at, but overall it continues to move the conversation forward in a very positive way,” Gifford said. “This is a good proposal to get us started.”
Originally, advocates proposed a $1.3 billion mass-transit expansion plan that would have included more buses, more routes and a light-rail line between downtown Indianapolis and Hamilton County. The latter has been particularly controversial and discussion has since moved away from the rail proposal, focusing instead on express buses.
As approved on Thursday, the plan would give local officials in five counties – Marion, Hamilton, Johnson, Madison and Delaware – the authority to develop plans and ask voters for permission to raise taxes through referendums.
Those options include an increase in the County Economic Development Income Tax and a business tax that would be imposed as a corporate income tax or a county employment tax, which is essentially a fee charged based on the number of a company’s employees. The business taxes would impact only those firms organized as so-called C corporations, not on partnerships or sole proprietorships.
Those corporate taxes could make up no more than 10 percent of the total operating costs of the system. And fares or other ridership fees would have to make up at least 25 percent of the spending.
Sen. Luke Kenley, a Noblesville Republican who heads the Senate Appropriations Committee, said the mix of taxes is meant to capture income from those who had been advocating the proposal. That includes a number of central Indiana business officials who testified that their employees need better ways to get to work and that an expanded mass-transit system would bolster economic development.
“We thought there ought to be some shared ownership in terms of paying for the system,” Kenley said. “It’s always fun to talk about something new; it’s a lot harder to come up with how to pay for it.”
The lone vote against the plan came from Rep. Mike Speedy, R-Indianapolis, who said he was concerned about the message that a tax increase on businesses would send.
“We are making recommendations to ultimately take additional dollars from the private sector,” Speedy said. The result might “not be best serving the people we’re intending to serve.”