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Johnson County weighs pros, cons of wheel tax

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A tax you pay when you renew your license plates will be up for renewal this year.

After five years, members of the Johnson County Council will need to decide whether to keep the wheel tax in place.

With the fee, local residents and business owners pay an additional $25 per year for cars, pickups, motorcycles and sport utility vehicles, and $40 for large vehicles such as dump trucks.

Since 2008, a family with three vehicles has paid an extra $300 and will pay another $75 when they renew their plates this year.

The fee has collected more than $13.8 million total for local governments, with money distributed to the county, cities and towns for road work.

The money has paid to pave streets, patch potholes and repair sidewalks and for larger projects, such as realigning intersections in the Center Grove area.

When the fee was approved in 2007, county officials said they wanted to review the tax in five years to see if it still was needed, with the hope that the state may have offered by now a new funding option for road work. That review is this year; to continue charging the fee, the county council would need to approve keeping the tax in place.

Across the state, 47 counties charge the tax, which can be between $5 and $40 under state law, according to the Indiana Legislative Services Agency.

To renew the tax, the county council must give its approval by June. The state requires either a unanimous approval or two separate majority approvals, so the council will need to discuss the issue by May, county council president Josh McCarty said.

County council members agree they don't like charging the fee, and they have gotten complaints from local residents.

But a majority of members also aren't sure how to pay for needed road repairs without the money it brings in.

"We can't afford to not have it. If you take that $2 million away, we won't be fixing anything," council member Brian Walker said.

For local governments, the wheel tax makes up nearly one-third of the all of road work funding, which includes money paid for salaries and benefits for workers.

"It's a tremendous amount of money," Franklin Clerk-Treasurer Janet Alexander said. "We really do rely on the wheel tax."

Other road funding that the city gets, including from property taxes, has decreased in recent years. The wheel tax is a significant amount of the money the city uses to fix and maintain roads, she said.

The wheel tax is the county's only option for additional road funding, McCarty said.

Local governments do not have another tax or fee that can be approved to bring in more money for road work, according to the Indiana House Ways and Means Committee.

"We are very limited in our revenue options as a county; and at this point in time, it is the only option we have to generate revenue for road repairs," McCarty said.

"Those are real dollars we would not have otherwise if it weren't for the wheel tax."

Without the tax, the money the county spends to fix, pave and build roads could be cut by as much as half. Officials would need to find a way to pay off a loan that is being paid back each year with part of the money that comes in from the wheel tax, Commissioner John Price said.

The county also has to also consider the needs of the cities and towns, which also receive the tax money and depend on that money for road repairs and construction, local officials said.

"Right now, we haven't come up with any other revenue that not only does the county benefit, but the cities and towns benefit too. So it would not only hurt the county government, but the cities and towns if that wheel tax were to go away," county council member Anita Knowles said.

In total, the wheel tax collects about $3.5 million per year. That money then is divided among the county, cities and towns based on the amount of roads they are responsible for fixing and maintaining. For example, the county gets about $1.5 million per year, Franklin gets about $460,000, and Greenwood gets about $1.05 million.

Some taxpayers have criticized the tax as unfair because it charges everyone the same amount no matter how much they drive and urged local officials to seek other sources of revenue to pay for road repairs.

County council member Pete Ketchum said he thinks the county is in a similar position to where it was five years ago with limited options for bring in more money to pay for road work, but he also has heard from local residents who want to see changes made.

"The county has come to depend on it. The county has had five years to come up with another revenue resource for road maintenance, but it seems at this point there doesn't seem to be any other options," Ketchum said.

He said he would be interested in looking for any possible changes to the tax or additional options for road construction funding.

No one is suggesting increasing the tax, but officials are considering changes, such as altering the amount people pay based on the vehicle they drive.

The council should consider changes, including how much people pay for different types of vehicles to make sure the county is charging the fee as fairly as possible, McCarty said.

Council member Ron West voted against the tax initially and said he plans to vote against renewing it this year because it is unfair.

"A guy driving 50,000 miles per year pays $25, and an elderly woman who drives to church once a week and drives 1,000 miles per year pays the same," he said.

West would like to see counties have another option, such as a tax on fuel purchases made in the county. That would collect more money and would be fair since people who drive more would pay more, he said.

But so far, that idea has not gained traction with state lawmakers, who would need to approve it, he said.

Price agreed that he would like the county to have that funding option but said it is not allowed right now. And the county has to look at its available options, he said.

West also is concerned with how the wheel tax money is being spent by the county, including paying off a loan for road projects.

The county borrowed nearly $6 million for a project to widen Whiteland Road, tied to a long discussed east-west corridor through the county. The loan would be paid back with wheel tax collections.

The county gets about $1.5 million per year in the wheel tax, and those debt payments total about $1 million the next two years and $586,000 per year until 2021, Price said. County council members approved that loan in 2010.

If the wheel tax were not renewed, the county would lose out on road funding and also would need to make that payment for the next nine years with other road funding, Price said.

In the past, wheel tax money has been dedicated to larger county projects, such as widening the intersection of Stones Crossing and Morgantown roads and realigning the intersection of State Road 135 and Golfview Drive, and repairing neighborhood streets, mainly in the Center Grove area.

"I don't know how to sustain the quality of roads have today without that money coming in," Price said.

But if county officials do decide to continue collecting the tax, they should require another renewal in five to six years, Knowles said.

Then, if the county does find other funding for road construction, the wheel tax can be ended, she said.

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  • johnsoncountyroadtax
    As a former Johnson County Commissioner it's my opinion the wheel tax should have been implemented back in 1984 when federal revenue sharing was used on roads and then discontinued by the feds. Politics entered into it and the County Council didn't have the people of this county in mind as they waited and waited until alot of our roads became wasted away. In 1984 every road in this county had been paved...look at them today! This is the only mechanism the county can use t try and stay on top of them. $25.00/car is not a great expense for someone whether they drive 1000 or 8000 miles on them per year...if you don't stay on top of them now you will have to borrow money later and these roads will be more expensive to repair! You were elected to the council to work for this county and you are not going to satisfy everyone. Stand up for what is right and do your job!
  • neverending
    when a tax is enacted do not ever expect it to go away. It becomes permanent and keeps going up. Same as our surplus checks that the citizens of IN was suppose to get back. And I think I am referring to the Republican party here also. They are suppose to be the party of lower taxes and spending. What a tragedy, politics as usually

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