MICHIGAN CITY — Michigan City’s recently passed wheel tax is on its way to the desks of state officials before it goes into effect next year.
The Michigan City Common Council, during its Aug. 19 meeting, approved an ordinance establishing an excise surtax and wheel tax after suspending the rules and holding both second and third readings on the same night.
The ordinance will be submitted to the Bureau of Motor Vehicles and Department of Revenue and will go into effect Jan. 1, 2026.
Michigan City Mayor Angie Nelson Deuitch, along with Matt Greller and Jennifer Simmons of Accelerate Indiana Municipalities, explained the proposed excise surtax and wheel tax during a workshop meeting held Aug. 18 in the EOC Room of City Hall.
The excise surtax, Nelson Deuitch said, will be for passenger vehicles, and the wheel tax will be for commercial vehicles. Both of which, she said, will be used to repair roads and streets within Michigan City.
Nelson Deuitch said the rates will range from $5 to $40 a year for personal vehicles and $7.50 to $25 a year for commercial vehicles. The minimum estimated revenue is $183,688 while the maximum is $638,783.
According to Nelson Deuitch, the main motivators behind this wheel tax are the dwindling amount of Riverboat funds the city is receiving, which the city has been relying on for several years, such as using it to fund the Street Department for various initiatives.
Riverboat funding, according to a presentation, averaged $8 million each year between 2022-25 and a historic low was recorded in 2020 with $6,810,846 received.
With Senate Enrolled Act 1, the city would also be seeing a loss in revenue over the next three years, with $1 million lost in 2026 and 2027 and $3.7 million in 2028, with Public Safety LIT and CEDIT going away that year.
Through adopting the wheel tax, benefits would include local control over infrastructure funding, reduced reliance on state allocations, and unlocking state funding and grant opportunities such as the Lane Mile Direct Distribution, a statewide pool of funding between $190 million and $255 million.
The city could also allocate about $200,000 for road and bridge capital projects, reducing reliance on competitive grants such as the Community Crossings Matching Grant.
“This is factual. Riverboat, we can’t count on that. And we shouldn’t,” Nelson Deuitch said.
“The fact of the matter is, the state is pushing this all back down to local municipalities to do. That’s what it is. Now we have to look at everything,” she added.
Geller commended those who came out to the workshop, saying they were doing what they needed to do to maintain the city services residents expect and it will be tough for local governments over the next few years.
“No one likes to pass a tax, nobody, but you have a little bit of an opportunity to get out in front of what’s coming down the road, or coming down the tracks, if you will. It’s going to be really important that you do this,” Geller said.
“You’re going to have to pass new fees down the road,” he added, regarding the impact of SEA 1.
“You’re going to have to pass a new income tax that replaces the old one that’s going to go away. A whole different list of things is going to come down the road,” he added.
Michigan City resident Ray Maloney said he wasn’t in favor of the wheel tax, even though he understood the issues. His reasoning behind it was when he formerly lived in Cook County, Illinois, he was being charged taxes on vehicles he had sold to other people.
He added that the wheel tax was so unpopular amongst communities, the county decided to repeal it.
“I understand we need money for various programs, but my recommendation is to look at your budget, cut some programs, and not add taxes,” Maloney said.
© Copyright 2025 LPHeraldDispatch.com