Indianapolis ponders commuter tax to fund road repairs

March 11, 2018

Indianapolis officials desperate for money to repair roads are considering whether they should try to collect income taxes from suburbanites who don't live in the city but who travel there for work.

Such a plan would allow Marion County, where Indianapolis is located, to collect income taxes from people in other communities who work in Indianapolis.

The tax has been discussed in Marion County intermittently for three decades. Indianapolis Mayor Joe Hogsett brought up the subject against late last month when he announced the city would seek to tap its rainy day fund to pay for needed pothole repairs.

At the time, Hogsett said he was sensitive to the stigma of the term "commuter tax" but that he didn't think it was acceptable that "Marion County residents bear the burden alone" when there are 150,000 people from outside the county who drive on the city's roads each day but whose taxes don't pay for upkeep.

Marion County would need approval from the Legislature and possibly surrounding counties to collect such a tax, The Indianapolis Star reported.

The latest discussion comes as Indianapolis officials estimate it would cost $732 million for city streets to be upgraded from poor to fair condition. They argue that people who commute to the city for work should help pay for road repairs because they are contributing to pavement wear and tear.

"I would encourage a conversation to take place over the long term that might cause the General Assembly to more equitably distribute income taxes that we currently pay," Hogsett said.

But some officials in nearby Hamilton County, where many people commute from, say a commuter tax would be unfair.

"Whenever someone goes into the city and buys lunch, dinner, or goes to a Pacers game, they already pay a sales tax," and contribute to the local economy, said Hamilton County Councilor Fred Glynn.

Glynn also said a commuter tax would amount to taxation without representation.

"We'd be paying a tax without being able to hold the local elected officials who are collecting it accountable because we can't vote for them," he said.

According to 2016 state tax return information compiled by Stats Indiana, 184,953 people live in another county but work in Marion County. Meanwhile, 50,831 people who live in Marion County work outside the county.

Stats Indiana also found that 54,836 Hamilton County residents commute into Marion County for work, while 15,145 Marion County residents travel to Hamilton County for their jobs.

The Indianapolis Chamber of Commerce has long supported such a tax but is open to suggestions, said Mark Fisher, vice president of government relations and policy development.

"It remains a top priority," Fisher said. "We think communities should be able to capture revenue from nonresidents who use our streets and other infrastructure."

Indianapolis also would need $178 million a year for upkeep, more than double the current annual funding that the city has available for all roads, bridge and sidewalk projects.


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