Council reluctantly considers new taxes

State lawmakers are essentially blackmailing local lawmakers in to imposing new taxes on residents who drive. That’s according to Wayne County Council members who reluctantly voted July 16 to consider requiring residents pay a new annual fee when registering their vehicles.

The local option highway user taxes include a wheel tax of up to $80 on larger vehicles and an excise surtax of up to $50 for smaller vehicles, collected during vehicle registration and renewals.

Considering the new fees comes after Indiana’s legislature changed its road and bridge funding. It reduced the amount available through Community Crossing Matching Grants but created another funding pot it will distribute based on lane miles of roads.

The catch? The new funding is only available to communities with the highway user taxes in place.

“None of us are happy about this at all,” council member Beth Leisure said during the monthly council and commissioners workshop that followed a full day of budget meetings. “I call it blackmail. I hate that we will have to do it.”

Council must pass an ordinance before the end of August to implement the funding mechanism Jan. 1. According to the ordinance, the county will charge the maximum $80 wheel tax fee for trucks heavier than 11,000 pounds of gross weight, trailers, truck tractors, semi-trailers, recreational vehicles and buses. It also will charge the maximum $50 for passenger vehicles, motorcycles and trucks with a gross weight less than 11,000 pounds. Council could still reduce those fees. (Read the entire ordinance in the legals on Page 21 of this WWN.)

Funds generated by the highway user taxes would be allocated to the county, Richmond and 13 county towns. The county would receive 48.23%, Richmond 40.32%, Centerville 3.35%, Cambridge City 2.20%, Hagerstown 1.97% and Boston, Dublin, East Germantown, Economy, Fountain City, Greens Fork, Milton, Mount Auburn, Spring Grove and Whitewater less than 1% each. The funds may only be used for roads and bridges.

Residents have an opportunity to address council about the proposed taxes during an 8 a.m. Aug. 6 public hearing in the chambers of the Wayne County Administration Building, 401 E. Main St., Richmond. Council will vote that day, needing a unanimous vote to pass the ordinance. If a majority votes in favor, but the vote is not unanimous, another public hearing will be conducted at the 6 p.m. Aug. 20 workshop. At that time, a majority vote would adopt the ordinance.

Max Smith, council’s president, said Wayne County has previously discussed highway user taxes; however, at those times, the proceeds would have been split with Richmond and the 13 towns without the lane-mile money incentive. That did not make the highway user taxes appropriate at the time.

“I feel that the situation has changed dramatically now with this large pot of money that would be available for our roads and bridges if we have the wheel tax,” Smith said.

Mike Sharp, the county highway supervisor, and Brandon Sanders, the county engineer, prepared a packet of information for council members. They noted that the county has received $4.2 million — which it has needed to match — from the Community Crossing Matching Grant program since 2016. Richmond and county towns also have benefited from the grants.

Over the past six years, more than $1 billion has been distributed, averaging more than $238 million per year. The grant program, though, will now only fund $100 million each fiscal year. With so much less available, that will make the grant process more competitive, reducing the county’s chances of receiving funds needed to repair or improve aging transportation infrastructure.

Wayne County has 1,370 lane miles of roads, which is 0.79% of the state’s total. Sharp and Sanders estimate the county could receive about $2 million the first year, about $1.2 million the second year and about $1.3 million the third year as the state changes the available funding pot. Totals also depend on how many counties and municipalities have enacted highway user taxes. Currently 55 counties have them.

“For the bigger pot, we do have to have it,” said council member Cathy Williams. “In Wayne County, we have 230 bridges and we’re the sixth largest with bridges to have to take care of. That’s what’s driving the bus here, is to try to attempt to get money from that extra pot.”

The Local Technical Assistance Program used 2023 data to provide estimates on how much revenue the county’s highway user taxes would generate. With the maximum fees, LTAP estimates the county would receive $1.7 million, Richmond $1.4 million, Centerville about $119,000, Cambridge City about $78,000, Hagerstown about $70,000 and the others between $2,900 and $30,000.

Should Wayne County not enact highway user taxes, others would benefit and the county’s ability to maintain roads and bridges, especially with recent inflation, would be impacted. Council members expressed pride in the quality of the county’s roads and bridges because of a concerted effort to maintain roads and replace bridges.

“If we miss the bus the first year, it’s going to be hard to really make that up with all the bridges and things that Mike and Brandon have on their list,” Williams said.

Council’s vote was 6-1 to advance the issue to public hearing, with Misty Hollis opposing. While the highway user taxes only provide money for roads and bridges, the legislature also implemented property tax reform that’s expected to significantly reduce revenues for all taxing entities. Hollis said further actions from council, such as additional local income taxes, will be likely, especially to help the smaller towns.

“It’s a double whammy for our residents,” said Hollis, expressing concern for families. “This isn’t it. This isn’t over. I feel like we need to have more of a plan of the total impact on our families and our citizens versus just this. I feel like we’re reacting very quickly.

“We have resources to get us through 2026 to have time to really look at the total impact we’re going to put on our families with taxes,” Hollis said.

Communities with populations greater than 5,000 have the option of enacting highway user taxes of their own. In Wayne County, that’s only Richmond. The other towns don’t have the option of enacting highway user taxes or local income taxes.

“We’ve got 13 communities here that can’t do anything,” council member Gary Saunders said. “They’re taking a beating from the legislature with no way of increasing anything other than they will share in this if we do it.”

Local governments still do not have much information about the impacts from the Republican-controlled state legislature’s actions this year. The Department of Local Government Finance continues to convert legislation into policies and procedures. Plus, the legislature has two years to update its actions.

“My concern is that as they tweak this, what other financial implications are we going to have and still be able to provide the services,” said council member Barry Ritter, noting that property tax reform was a key issue when Gov. Mike Braun was elected.

The legislature’s actions sent the message that it would not provide additional funding to local governments that have not implemented the taxing tools statute provides them. But local lawmakers know residents may not follow that logic when they’re feeling a financial pinch.

“This was an act of the legislature, not the act of any of us,” council member Jeff Cappa said.