If enacted, a bill introduced Tuesday in the Indiana General Assembly would punish local governments that refuse to implement a wheel tax, according to a Bartholomew County commissioner.

In December, the Indiana Association of County Commissioners advised members that legislation scheduled to be introduced this month would tie eligibility for Community Crossings dollars to whether a county or municipality enacts a wheel tax. Bartholomew County Commissioner Larry Kleinhenz describes this specific provision found within HB 1461, authored by State Rep. Jim Pressel, R–Rolling Prairie, as “atrocious.”

“My understand is that it does have provisions to require local jurisdictions to have a wheel tax in place in order to have access to Community Crossing grants,” said State Rep. Ryan Lauer, R-Columbus. “I’m against it. I don’t think it’s appropriate to tie state funding to a local tax.”

HB 1461 is scheduled to be heard by the House Roads and Transportation Committee, which Pressel chairs, at 10:30 a.m. on Monday. Pressel was also House Chairman for the Interim Study Committee on Roads and Transportation, and the House Majority member of the Funding Indiana's Roads for a Stronger, Safer Tomorrow Task Force.

Formally called the Local Option Highway Vehicle Tax, a county wheel tax is essentially a local registration fee that applies applies to all vehicles not subject to the excise surtax. It applies to buses, RV’s, semi-tractors, semi-trailers, tractors, trailers, and trucks 11,000 pounds or heavier. Rates may be between $5 and $40 per vehicle.

The Community Crossings Matching Grant program (CCMG) provides up to $1.5 million annually in matching grants to each unit of city, town or county government approved by the state to upgrade roads and bridges. Communities with a population of fewer than 10,000 only have to match 25% of the grant, while counties and cities with a population of more than 50,000 have to match 50% of the grant.

The city of Columbus and Bartholomew County have been provided several million dollars in matching grants since the program was launched by the Indiana Department of Transportation (INDOT) in 2016, Lauer said.

“We rely on that money,” Lauer stressed. “It’s hard to imagine us losing those dollars in lieu of not doing the wheel tax. But my strongest objection is the tying of state funding to implementing a wheel tax. That’s a bridge too far.”

Kleinhenz said he sees the bill as an attempt to punish Bartholomew County for being efficient and not overtaxing constituents.

During a financial crisis, a proposal for a wheel tax was briefly considered in 2017 by the Bartholomew County Council. But the proposal was dismissed because wheel tax revenue must be spent on road and street projects. They eventually approved a local option income tax that went into effect in 2018, which allows the county far more flexibility on where the money is spent.

The council also dismissed the concept of a wheel tax in May 2009. Instead, an economic development income tax was approved that council members said provided more money and eventually less spending restrictions.

While Lauer says he’s against forcing counties to adopt a wheel tax, he does share Pressel’s concerns about a projected transportation infrastructure shortfall in 2030. As Hoosiers upgrade to more fuel-efficient vehicles such as electric and hybrid options, there will be less money from gas taxes for road and bridge improvements, INDOT officials say.

In addition, inflation and other factors continue to raise the cost of road and bridge maintenance, Lauer said.

“Road building, the cost of asphalt, everything has gone up the past few years,” he added. “Labor costs are also up. People are saying it’s costing 20 to 30% more to maintain and pave our roads.”

Currently, motor fuel taxation yields eight of every 10 dollars that fund roads and bridges on the state and local levels, according to representatives of Next Level Indiana, which makes targeted investments in Indiana.

Last summer, INDOT suggested increasing existing transportation fees and taxes, tying registration fees to vehicle age or fuel efficiency, directing some electric and hybrid vehicle fees away from the CCMG program, adding road usage fees, tolling more roads and bridges, taxing electric vehicle charging, and several other strategies.

One positive thing Lauer cites about HB 1461 is that it allows local units of government more spending flexibility. For example, the bill would allow a street or highway department to use state funds to purchase more road salt if needed. That type of purchase is currently not allowed with CCMG money, he said.

Pressel has worked with other lawmakers almost two years examining revenue-raising possibilities as the state and local levels. In December, Pressel said he planned to file a “buffet” of options for local governments, which appears to be what HB 1461 is offering.

Other options include increasing the maximum rate a county may impose for a wheel tax and vehicle excise tax, removing limitations on the Indiana Finance Authority on issuing revenue bonds or notes to finance highway and road projects, and reallocating some township funding for roads and bridges.

But after two years, the Funding Indiana’s Roads for a Stronger, Safer Tomorrow Task Force hasn’t coalesced around any single fix, Pressel said in December. After talking with the bill’s author, Lauer said HB 1461 is not finished.

Lauer said he will push back against tying CCMG funding to a wheel tax. He said he will keep an eye on HB 1461 as committees make changes through the amendment process before deciding whether or not to support the measure.
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