Indianapolis drivers could pay more for vehicle registrations in the future in exchange for improved roads under a new proposal from leaders on the City-County Council.
The proposal calls for higher fees on vehicle registrations in Marion County to cover the cost of road repairs and meet a requirement set by the state Legislature to qualify for more road funding. However, Indianapolis Mayor Joe Hogsett isn’t on board with the proposal.
Council leaders plan to unveil the proposal Friday morning. They say the fee hike is expected to bring in an additional $70.95 million in 2027 and about $355.75 million over five years.
The city needs to allocate at least $50 million in new funding toward roads next year in order to receive a $50 million state match. Combined with the state match and $20 million already allocated, the increase in funds toward Indianapolis roads for the year would be more than $140 million.
The proposal would mark a significant increase to existing funding for road improvements. In 2026, the city budgeted $216 million for road capital projects.
Indianapolis faces a disadvantage in maintaining travel infrastructure due to a state road-funding formula that uses centerline mileage and doesn’t take into account multiple lanes of traffic or traffic volume. A report from Indianapolis-based engineering firm HNTB Corp. using 2019 data found that the city would have to allocate $635 million annually just to maintain current roadways.
Council President Maggie Lewis, a Democrat, said the time has come to take action to raise infrastructure funding even though councilors aren’t excited to increase fees. The tradeoff, she said, is that the city would be capable of spending more money to fill potholes, which could prevent ruined tires and bent wheels.
“You are going to see the return on your investment immediately,” she said.
Lewis and Councilor Andy Nielsen, the assistant majority leader, cited financial pressures coming from the state level. State lawmakers have limited revenue growth through property taxes, while also incentivizing Indianapolis to spend more money on its own roads in order to receive a state-mandated match.
“The state has made a policy decision for us to change how we fund local government,” Nielsen told reporters. He said the city can no longer rely so much on property taxes and needs to find other sources, like user fees.
Under the proposed ordinance:
• For vehicles that currently pay the county vehicle excise surtax — including passenger cars, motorcycles, and trucks under 11,000 pounds — the proposal would replace the current fee structure with a flat $100 annual fee paid at registration. Currently, the surtax is based on 10% of the state vehicle excise tax, with a minimum charge of $7.50.
• For vehicles subject to the county wheel tax, the proposal would replace the current fee schedule of $10 to $40, depending on vehicle type, with a flat annual fee of $240 paid at registration.
• These fees apply to different types of vehicles. A vehicle that pays the excise surtax would not also pay the wheel tax, so no vehicle would be charged both fees.
• These changes would take effect on Jan. 1, 2027.
Currently, registration records show that the average driver of a mid-size vehicle pays $20 for the county vehicle excise surtax, Nielsen said.
Neither the excise surtax or the wheel tax has increased since Marion County first implemented them in 1992, Nielsen added. The fees brought in just over $15.4 million in revenue in 2025.
The proposal goes against Indianapolis Mayor Joe Hogsett’s long-held position that he would not increase any taxes to fill the city’s road-funding gap. He advocated against the council’s measure in a written statement Thursday evening.
“Throughout my tenure as Mayor of Indianapolis, two principles have guided my approach to infrastructure: residents deserve stronger, sustained investment in their roads, and they should not be asked to pay more in taxes,” the statement read.
In the past decade, Hogsett said, the administration has tripled the funds for Indianapolis roads without raising taxes.
The mayor wrote that now is not the moment to ask Indianapolis families to “shoulder an additional financial burden,” and particularly not with a proposal that “puts the heaviest burden on those who can least afford it.”
“We owe it to our community members to deliver solutions that invest in infrastructure without placing additional financial strain on hardworking families. It is my firm belief that the proposal announced today is not that solution,” Hogsett said in the statement.
Lewis told reporters earlier in the day that councilors met with the mayor and his administration on the proposal, but ultimately the council’s role as the city’s fiscal body is to fund the city budget. The council’s plan does that, she said.
In total, it would mean an additional $855.7 million spent on roads over the next five years.
Nielsen said that will include money spent on thoroughfares, but also other areas. In 2027, he said, it could mean $104 million in new dollars for capital projects, $38 million for residential streets repairs and $3 million for alleyways.
The proposal still has a long way to go before drivers pay additional fees to renew or complete vehicle registrations in 2027. It will be introduced Monday, June 1, and then receive hearings before three City-County Council committees: Administration and Finance Committee on June 9, the Public Works Committee on June 11, and the Rules and Public Policy Committee on June 16. These committee meetings are typically held at 5:30 p.m.
Members of the public will have the opportunity to provide public comment at each of these committee meetings. The final, full City-County Council vote is slated for July 6.
Meeting the match
The city’s action is partially spurred by recent state-level moves that give Indianapolis an incentive to identify new funding sources.
A 2025 law created a state matching program in which Indianapolis could access $50 million in state road funding as long as it matched that amount with newly allocated city money.
This year, lawmakers tweaked that provision to require Indianapolis officials to identify more funds, rather than maintaining a one-to-one match: $70 million in 2028, and then a $10 million increase each of the following years until 2031, when the amount caps at $100 million. The additional state contribution will remain at $50 million annually despite the higher thresholds.
Beyond 2031, Indianapolis will still be eligible for the $50 million allotment if it allocates the $100 million.
The possibility of receiving that match ends as soon as Indianapolis fails to meet it. It isn’t automatic; Indianapolis is required to notify the state treasurer of whether the funds are available at the end of every year.
Nielsen said this proposal is a “transparent, long-term strategy” that will ensure the city can “leverage the state’s investment and provide more permanent funding for a critical and basic government service.”
The proposal must be passed by Sept. 1, the state deadline to alter vehicle taxes for the following year.