Kokomo Tribune; Kokomo, Indiana

January 29, 2013

Local councils may lose wheel tax control

Legislators looking to increase road funding

By Scott Smith
Kokomo Tribune

Kokomo — They’ve tried three times to establish a wheel tax in Miami County, but the road-funding measure never found the votes to pass.

The Miami County Council is where the impasse lies.

The last time the idea was broached, in 2005, it failed on a 3-2 council vote. It needed four votes to pass.

Now state legislators want county councils to share the wheel tax decision with cities and towns.

State Reps. Mike Karickhoff, R-Kokomo, and Bill Friend, R-Macy, have proposed putting the decision in the hands of a county income tax council, a fiscal body created by the Indiana General Assembly in 1984 to decide local income tax issues.

A tax council, as it’s called, is actually a series of votes by different elected fiscal bodies, with each body controlling a specific percentage of the overall vote.

For instance, in Howard County, where upwards of 60 percent of the population lives in the city of Kokomo, the city would control a similar majority of the vote. Greentown and Russiaville’s respective town councils would control much smaller percentages of the overall vote.

Miami County Council President Ralph Duckwall said Tuesday the Karickhoff-Friend bill might not make much of a difference in Miami County, where the majority of the population still lives in unincorporated areas. That means, even under the tax council method of voting, the county council would still hold a majority.

Duckwall said the county could use more road funding, but he is hesitant to impose a wheel tax. He said he has qualms about spreading the responsibility for the decision.

“The fewer people creating more taxes the better,” Duckwall said. “You shouldn’t jump at the chance to raise taxes.”

But the measure, HB1117, is due up for a hearing in front of the House Ways and Means Committee today, and it has the potential to change the prospects of establishing a wheel tax in the 45 counties currently without one.

“You have county councils that have control of the wheel tax, but you have counties with a city where most of the traveled road miles are concentrated, and those cities aren’t empowered to access that wheel tax,” Karickhoff said Tuesday.

“Then you have county councils which want the wheel tax as much as the city councils and town boards do, but those county council members only want local control right up to the point they have to vote to raise taxes,” he said.

Counties are allowed to impose two separate, but linked, taxes, on top of the state vehicle excise taxes motorists pay annually.

The wheel tax, which can be imposed on any vehicle, including buses and semitrailers, can range from $5 to $40 per vehicle.

The excise surtax, which can be imposed on passenger vehicles, motorcycles and light trucks, and has to be passed jointly with a wheel tax, can be anywhere from 2 percent to 10 percent of a vehicle’s state excise tax, or a specific dollar amount ranging from $7.50 to $25.

Both taxes together are usually referred to as a wheel tax.

The funding has to be used on road work. The last time Miami County officials discussed the two taxes, it was estimated they could raise an additional $489,000 a year if imposed at the maximum rate, although the officials in favor of the tax were willing to settle for a lesser amount.

Typically in wheel tax battles, representatives of urbanized areas have backed imposing the tax, while rural elected officials have balked, but those lines aren’t always clear cut. Karickhoff said he believes the Indiana Association of Counties will testify in favor of the bill today.

Howard County and Tipton County already have the wheel tax.

State officials estimate another $73 million could be raised for local roads if counties without a wheel tax go ahead and adopt one.

Karickhoff said he understands that counties might not want to give up total control over the wheel tax vote, but the bill would leave one element of control completely in the hands of county councils.

In counties where the wheel tax already is in effect, the county council would still be able to decide, unilaterally, to eliminate or lower the tax.