Changes to state law mean Brown County residents could pay more when they register their vehicles.
House Bill 1001, signed into law March 24 by Gov. Mike Pence, raises the cap on the county wheel tax from $40 to $80, and the cap on the county excise surtax from $25 to $50 — or from 10 percent to 20 percent, depending on how the county calculates it.
Wheel tax and surtax are paid when Hoosiers register or renew a vehicle each year. The revenue is split proportionately between the county and Nashville and must be spent on roads and bridges.
County wheel tax mostly applies to large commercial vehicles and trailers.
It varies from $15 for a trailer to $40 for large trucks.
The surtax — which applies to cars, trucks and other vehicles under 11,000 pounds — is 10 percent.
In 2015, Brown County took in about $66,000 from the wheel tax and $417,000 from the surtax, which it then split with Nashville.
If both taxes were raised to the maximum, the county would probably have around another $400,000 to spend on roads and bridges, said Brown County Highway Department Superintendent Mike Magner.
But local officials aren’t sure what they’re going to do with the tax rates yet.
Raising the existing county vehicle taxes — or even having the taxes in place at all — is up to the Brown County Council.
The new law directs the state’s 2016 surplus — which would otherwise be split between individual tax refunds and the pension stabilization fund — to roads and bridges.
But there’s a catch.
Of that, 55 percent will go to the Indiana Department of Transportation to use on state roads and the other 45 percent will go to INDOT to hand out as grants to local communities.
Counties that want access to the grant money will have to put up matching funds for every grant dollar they receive.
But those matching funds can only come from one of three places: money from an increase in the county vehicle taxes, from the county’s rainy-day fund or from a special distribution of county income taxes expected this spring.
In a previous version of the legislation, counties such as Brown County would have had to raise their wheel tax and surtax to the maximum in order to be eligible for the grant money, Magner said.
Now that is only a requirement to get money from the state’s distressed road fund, which Brown County is unlikely to be eligible for anyway, he said.
As of now, INDOT has not issued any guidance on what counties will have to do to be otherwise eligible for grants from the new fund, Magner said.
Magner would have rather the state simply send the money back to the counties it came from, he said. The grant process introduces additional costs and drags projects out years longer, he said.
County council President Dave Redding said he is not completely comfortable with how the state is setting up the grant fund, requiring counties to raise more taxes to get access to tax money that residents have already paid.
However, he does agree with using the wheel tax and surtax to deal with road funding shortages, he said.
“Wheels touch roads,” he said. “The direct path is to tax things that are highly — almost exactly — correlated to roads, to improve roads.”
County commissioner Diana Biddle said she’s concerned that the General Assembly will attach similar conditions to future road funding bills.
Magner, Biddle and Redding said they are still working through the new law, and none said they feel they fully understand all the possible implications.
State law does stipulate deadlines to make a decision. If the county wants to collect higher wheel tax and surtax in 2017, it will have to pass a new ordinance before June 30.
Redding said he is most concerned about how the council can gather enough public input in such a short time.
Whatever the county decides to do, it is important the public understands what is happening and has a voice in the decision, he said.