If you live here in Johnson County but work in Indianapolis, the city wants you to pay an income tax that would help pay for its roads and police and other services.
It’s an idea the city wants state lawmakers to consider when they meet next year. But legislators representing Johnson County already oppose the idea.
Indianapolis Mayor Greg Ballard’s $1 billion budget for the city next year includes hiring 50 new police officers and 20 new firefighters and using $6 million in parking meter funds to help pay for infrastructure work.
During his budget presentation, Ballard said he would like state lawmakers to consider a commuter tax to help pay for public safety and road work. The Indy Chamber has been working with the city to create a proposal of how the tax would work.
In Indiana, workers pay an income tax to the county where they live, not where they work. That means that residents of Johnson County pay the county’s 1 percent tax regardless of where they work. The county collects that money and uses it to pay employees and provide services here.
About 200,000 commuters go to Marion County each day for work, including more than 27,000 from Johnson County.
Those workers don’t pay an income tax to Indianapolis, and officials want commuters to shoulder some of the cost of running and maintaining the city where they spend a big chunk of their week.
Because the population swells so much each day when people come to work, the city needs more money to repair roads and provide police and fire protection, Indy Chamber president and chief executive officer Michael Huber said.
“You’re obviously talking about public safety. You talk about streets and infrastructure, economic development, parks, other amenities that are located inside the city of Indianapolis,” said Marc Lotter, communications director for the mayor’s office.
Neither the city nor Indy Chamber has decided on how the new tax would be charged, but it would likely be a percentage of a person’s income. For example, if the tax were .25 percent, a commuter earning $50,000 per year would pay $125 in commuter tax annually.
The Indy Chamber is checking with other Hoosier cities that have a large numbers of commuters, such as Fort Wayne and South Bend, to see if they would be interested in charging a similar tax, Huber said. Those cities face the same problems, just not on the same scale as Indianapolis, he said.
State lawmakers would need to create the new tax and decide how much it would be assessed and how it is collected, Huber said. The legislature would need to approve the tax first, then other local approvals might be required, depending on what rules the state lawmakers set.
Lawmakers representing Johnson County aren’t supportive of a commuter tax because residents wouldn’t see much benefit from the tax and they already support Indianapolis by spending money at city businesses.
The tax wouldn’t be fair because surrounding counties wouldn’t be charging Marion County residents who commute out of Indianapolis for work, said State Sen. Brent Waltz, who represents parts of both Marion and Johnson counties. For example, a southside resident who works at Greenwood Park Mall wouldn’t be paying for Greenwood police or roads.
“The word ‘insane’ comes to mind when I think of commuter tax,” Waltz said.
Commuters and visitors to Indianapolis already pay a 2 percent food and beverage tax, which helps pay for city services. For example, a worker who grabs lunch at a downtown deli pays the 2 percent food and beverage tax in Marion County.
Indianapolis gets to keep half, while the other half goes toward making debt payments on the demolished RCA Dome, Lucas Oil Stadium and the renovation of the Indiana Convention Center. Once the annual debt payment is funded, the county gets to keep the entire 2 percent.
Johnson County has a 1 percent food and beverage tax, and the money it generates is one of the three biggest revenue sources for the county after property and income taxes, county council member Jim Eckart said.
Like Indianapolis, half of the money collected goes to pay for the Lucas Oil Stadium debt until the annual payment is made, then the county keeps any additional money that’s collected. By paying the food and beverage tax, Johnson County residents already help Indianapolis draw in large conventions and visitors to sporting events that pump money into the local economy, he said.
Commuters or visitors also pay to park downtown either in a garage or at a meter, which generates more money for the city, said State Rep. Woody Burton, who represents Greenwood, New Whiteland and Whiteland. People also pay tax whenever they grab a cup of coffee, go shopping at Circle Centre mall, go to an Indianapolis Colts game or fill up their car with gasoline.
Sales tax is kept by the state but is part of the revenue the state uses to pay for schools. Gasoline tax also is collected by the state, but part is shared with counties based on their population, number of registered drivers and how many miles of road they have, so drivers already pay to help maintain Indianapolis streets.
“Every time one of us goes to Indianapolis to buy something or eat something, we pay. You can’t just start taxing other people for their situation. I don’t think that’s proper,” Burton said.
Burton said he doesn’t expect lawmakers would give the commuter tax idea a hearing during the upcoming session. But if they did, he wouldn’t support it, he said. Commuters he talked to in the county don’t want to pay the tax because they don’t see how it would benefit them.
Eckart, who commutes to Eli Lilly and Co. downtown for work, said he doesn’t feel he utilizes the types of services Indianapolis wants to fund with the commuter tax. He drives less than a mile from the interstate to his office; and although police make the city a safe place to work, workers typically aren’t the ones causing problems that police need to respond to, he said.