Franklin officials are implementing a wheel tax to continue receiving vital road and bridge funding.
The Franklin City Council unanimously approved a wheel tax and excise tax Monday in response to a newly-passed House Enrolled Act 1461. Among other things, HEA 1461 requires local units of government to implement a municipal wheel tax and excise tax to get funding from Community Crossings Matching Grant, a state grant program that has helped municipalities make road improvements.
Effective Jan. 1, 2026, Franklin’s wheel tax will be $40 and excise tax will be $25 on certain motor vehicles registered within the city of Franklin. City officials can only use the wheel and excise taxes to construct, reconstruct, repair or maintain city streets and roads, as a contribution to an authority established in state law, as a contribution to obtain a grant from Community Crossings Matching Grant and other uses under state law.
City officials were led to adopt the ordinance because they wouldn’t be eligible for Community Crossings otherwise, according to the ordinance and state law. Per already-existing state law, communities cannot adopt a wheel tax without concurrently adopting an excise tax.
Franklin follows other municipalities that are considering a wheel tax in response to HEA 1461, including Greenwood and New Whiteland.
If Johnson County retains its wheel and excise taxes, Franklin residents may be taxed from both the county and the city. This is because certain language preventing double taxes were removed from the law before it was passed by the Indiana General Assembly, said Lynn Gray, city attorney. She mostly referred to it as a layered tax, similar to property taxes.
“I am going to take the legislature at its word … by striking that language, it’s entirely possible that there can be a county wheel tax and there can be a city wheel tax,” Gray said. “The reason I’m going to take them at their word is that has been a big issue, that they want local entities to start looking for more taxes, and frankly that’s how property taxes work too. They’re layered, and everybody knows that when you’re a resident of Johnson County, you pay a county tax, then you pay on top of that a city tax, and then you pay a school tax.”
When the language was removed, the state also extended the deadline to implement a wheel tax to 2027, meaning Franklin would have to introduce and get the wheel tax approved in 2026. However, Gray was unsure whether Johnson County’s wheel tax would continue to trickle down to Franklin for that year-long gap if the council introduced and approved the tax in 2026.
For example, Mayor Steve Barnett said he was unclear whether the law would allow the county’s wheel tax to continue to be allocated to Franklin even if they didn’t implement the wheel tax, and Gray said county officials could choose to keep all of the money generated from their wheel tax because of financial restrictions. If Franklin didn’t get their allocation of the county’s wheel tax, that would result in a $600,000 loss, she said.
“Since 2017, we’ve received $7.5 million worth of Community Crossings,” Barnett said. “So that’s what possibly could go away and even if we were eligible to get the grant, without the $600,000 to match, that puts a dent in it.”
However, the county may choose to rescind its wheel tax so residents aren’t double taxed. No decision has been made by county officials yet.
“Knowing and reading the papers, they say basically that the county needs money for roads,” said council member Shawn Taylor. “With everything else way behind, I could see them just going in and saying, ‘We’re going to keep the whole thing and it’s going to be a double tax.’”
Among other questions, council member Josh Prine asked whether the county could use money they will get from the recently reinstated cumulative bridge fund to do road repairs. Johnson County’s bridge fund is designed to provide funding for construction, maintenance and repair for bridges, approaches and grade separations. Per state law, the money can also be used for bridges in municipalities within the county except those owned by the state, along with county-wide bridge inspection and safety ratings.
Council member Irene Nalley asked whether the potential double tax would happen yearly or just be a one-time occurrence, with Taylor also asking whether the county could just tax county residents and not city residents.
The possible double tax would happen yearly if the county retains its wheel tax alongside Franklin’s newly-approved wheel tax. But Barnett said the hope is that the county would choose to just tax county residents with the wheel tax.
Barnett clarified that the city doesn’t know if that’s going to happen for sure, but officials are just doing what they need to with what state legislators are telling them. It’s ultimately up to the county on whether it becomes a double tax, he said.