Brown County residents may pay up to $65 more for each vehicle and trailer they register in 2017, so more money can go toward local roads and bridges.
On May 16, the Brown County Council voted to draft an ordinance increasing the local vehicle surtax and wheel tax to new state maximum levels.
The draft will get a first reading at a special meeting of the council and commissioners at 9 a.m. Wednesday, June 1. The second reading and vote will take place Monday, June 20 during the council’s normal 6 p.m. meeting.
If the vehicle surtax is raised to the maximum, people registering passenger vehicles and trucks under 11,000 pounds — including motorcycles and mopeds — will pay $50 in local surtax per registration.
To register vehicles over 11,000 pounds — such as buses, dump trucks, recreational vehicles and some farm equipment — as well as trailers of all sizes, the local wheel tax will be $80 per registration.
The state also charges a vehicle surtax and a wheel tax, so the local increase will be added to the state’s charges.
By state law, local governments are required to spend money from vehicle surtaxes and wheel taxes on roads and bridges.
New state legislation encouraged local governments to raise their local vehicle taxes to a new, higher cap so they would have the maximum amount of money to apply toward a new Indiana Department of Transportation grant program for road work.
The requirement to raise the taxes to the max did not make it into the final bill; however, under the bill that did pass, to receive one of the grants, a town, city or county must pay half the total cost of the projects, with INDOT paying the other half, up to $1 million.
Revenue from an increase in local vehicle taxes is one of three ways in which a local government can pay its half.
How much could we get?
At the May 16 commissioners/council joint meeting about these changes, Patrick Conner, from Purdue’s Local Technical Assistance Program, shared charts showing that the county would generate $1,343,481 by raising its wheel tax and surtax to the new maximums.
If the rates were unchanged, the county would generate only $487,386 — losing out on $856,095.
Of the total local vehicle tax collected, 97.4 percent goes to the county and 2.6 percent goes to Nashville. So, the town, too, would see its share grow by more than $22,000, from $12,671 to $34,928, for use on its streets.
If the council did not raise the wheel tax to the $80 maximum and only doubled current fees — which vary based on vehicle classification — Conner’s chart shows $703,185 in new revenue.
County commissioner Diana Biddle said she thought it would be excessive to raise the wheel tax on a trailer weighing less than 9,000 pounds from $15 to $80. There are 2,682 such trailers registered in Brown County. Biddle recommended that they raise the rate to $50 instead.
In order to collect the additional taxes in 2017, the council must pass an ordinance by Thursday, June 30. If the ordinance is passed after that date, the new tax rates will not go into effect until 2018.
Ways to use it
The town and county could apply for up to $1 million under the new INDOT grant if they scrape together match money from a couple different sources.
A local government could combine revenue from the new tax rates with money from the rainy day fund, or from an extra tax disbursement that was received from the state in May.
Whatever route they choose, the town and county can only get as much grant money as they are able to match with local funds.
If the town gathered up all of its $78,000 special income tax distribution, the $30,000 in its rainy day fund and the $22,000 expected to come from the new vehicle taxes, it could have more than $125,000 to put up as match money, Town Manager Scott Rudd said.
If INDOT matched it with a grant, the town could get a quarter-million dollars to spend on its roughly 11 miles of streets.
Rudd said that’s a big number for the town, which didn’t have any paving money for the past two years.
His recommendation to the town council May 19 — which was approved — was to take $20,000 of the special income tax distribution and spend it immediately on sidewalk repairs.
Brown County maintains 400 miles of roads.
Brown County Highway Superintendent Mike Magner said 70.8 miles should have been repaved in 2015. That would have cost $11.2 million.
But the county had only $2.4 million to spend, so it stabilized and paved 17.7 miles of road and paved an additional 5.66 miles that did not also require stabilization.
Even if the county had had the money to repave the other 48 miles Magner identified, an additional 42 miles of road work would still need to be done this year, he said.
About a quarter of the county’s roads are in need of immediate attention this year, by Magner’s estimates.
“You can tell we’re behind the 8-ball big time just trying to get caught up,” he said.
Though several audience members were critical of the tax increase and the justification that it would be used to get more grant money, most who spoke up said they were in favor of paying more if it meant better roads.
Local contractor Jim Schultz said he pays to register 10 or 11 vehicles each year, but he is in favor of the increase.
“I think it’s money well spent,” Schultz said. “It’s a cost of living.”
Vehicle surtax is charged on all passenger vehicles and trucks under 11,000 pounds, as well as motorcycles and mopeds.
Wheel tax applies to larger vehicles and trailers — mostly commercial trucks and buses, but recreational vehicles are also charged wheel tax. Vehicles registered any political subdivision and buses registered to nonprofits are exempt from wheel tax.
Currently, Brown County residents pay a local surtax equal to 10 percent of the state excise tax when registering a vehicle, which varies based on vehicle age and value.
The minimum rate anyone can pay is $7.50 per vehicle. The tax on mopeds is a flat $10 rate.
The ordinance the county council has proposed would change the surtax to a flat, $50 fee for all vehicles, regardless of age or value.
For example, brand new vehicle valued at $35,000 would have been charged $46.90 in county surtax in 2016, according to Indiana Bureau of Motor Vehicle excise rate charts. This is based on and in addition to the $469 state excise tax.
With the local tax at a $50 flat fee, the total tax bill of about $516 would actually go down to $457 in 2017, as the vehicle aged.
In contrast, someone paying the minimum $12 state excise and minimum $7.50 local surtax on an older vehicle in 2016 would see their registration taxes more than double in 2017, from $19.50 to $62. Mopeds would see a similar increase.
Currently, the Brown County wheel tax varies based on vehicle category, with the county ordinance designating rates ranging from $15 for a trailer, to $40 to a large truck such as a cement mixer or garbage truck. Semi trailers and tractors are registered separately, with a $25 tax rate for each currently.
Under proposed wheel tax ordinance, all wheel tax classifications would be charged the same $80 fee, from the smallest trailer to the largest bus.
|Vehicle||Current rate||Proposed rate|
|Passenger vehicles||10 percent of state excise, $7.50 minimum||$50|
|Trucks under 11,000 pounds||10 percent of state excise, $7.50 minimum||$50|
|Motorcycles||10 percent of state excise, $7.50 minimum||$50|
|Vehicle||Current rate||Proposed rate|
|Bus (Privately owned)||$30||$80|
|Farm semi tractor||$25||$80|
|Farm semi trailer||$25||$80|
|Trailer under 9,001 pounds||$15||$80|
|Trailer over 9,000 pounds||$15||$80|
|Truck over 11,000 pounds||$40||$80|
|Bus (School corporation)||Exempt||Exempt|
|Bus (Nonprofit organization)||Exempt||Exempt|
|Political subdivision owned||Exempt||Exempt|
Under the new Indiana Department of Transportation grant program outlined in House Bill 1001, counties, towns and cities that have created an asset management plan — an itemized evaluation of transportation infrastructure — can apply for a grant for road or bridge work.
It is a matching grant, and the county must cover at least half of the cost of any work.
INDOT will award no more than $1 million annually per applicant.
In order to receive the full $1 million from INDOT, a local government would have to submit a grant proposal for $2 million worth of work, and have $1 million to contribute.
Local governments across Indiana will compete for $185 million of available funds in 2017. The state estimates that pot will contain $69.2 million in 2018, and $104.9 million in 2019.
Half of the grants must be awarded among Indiana counties with fewer than 50,000 residents, either to the counties or to towns or cities within those counties. There are 65 such counties in Indiana.
INDOT has not released all the details on how grant requests will be evaluated. However, regional significance of a project is one of the criteria to be considered.
By law, the local match has to come from one of three sources: supplemental disbursements of county income tax revenue, a rainy day fund, or increases to local vehicle taxes.
The supplemental income tax disbursements come from reserves held by the state as a safeguard against unexpected declines in local incomes.
Senate Bill 67, passed in the last legislative session, lowered the percentage of income tax revenue the state holds in reserve for the counties.
As a result, the state disbursed just over $1 million to Brown County political subdivisions in May. Of that, $823,103 went to the county and $78,384 went to Nashville.
The Legislative Services Agency predicts no supplemental disbursement for 2017.
The LSA estimates the state will issue supplemental disbursements to Brown County to be divided among political subdivision in 2018, 2019 and 2020 for $437,000, $624,000 and $528,000 respectively.
The rainy day fund is limited, with no regular revenue stream. In the past, it has been used to deal with unanticipated expenses, such as a higher-than-normal medical insurance claim for which the county is liable.
If the rainy day fund is emptied, the county will have no other fund to tap for unanticipated expenses.
With no more than $856,095 in additional revenue expected from the local vehicle taxes increase, Brown County would have to use some combination of the three possible revenue sources to secure a $1 million grant.
If you want to share your opinion on raising vehicle taxes with the county council before their June 1 meeting, email the entire council at email@example.com.