County Income Taxes for Transit? Hoosiers to Decide

When it comes to allowing voters to decide whether to increase local or state taxes for transportation, the most common option by far is the local or state sales tax. But what about income taxes; has it been tried before? And for public transit only?

2 minute read

March 28, 2014, 7:00 AM PDT

By Irvin Dawid


Indiana Gov. Mike Pence signed a bill on Wednesday (March 26) allowing six counties to decide whether to allow voters to approve or reject a new local income tax to fund public transit improvements. Why the income tax was chosen over other options is not entirely clear, but may have been for concern of one of the governor's stipulations: that it "contain no new, local corporate tax," as WISH TV reported. Corporations pay sales taxes.

The bill overcame the opposition of the local Tea Party that we described last year.

"The law authorizes officials in Marion, Madison, Johnson, Hancock, Hamilton, and Delaware counties to seek voter permission to raise income taxes to fund a regional bus system," writes Lesley Weidenbener, adding that it also requires (county) officials to seek corporate support for the system. Indianapolis is in Marion County.

The issue that may have been the most contentious was whether to allow counties to consider funding light rail - which Gov. Pence appeared to have decided. In addition to stipulating "no corporate taxes", he indicated he would not have signed had light rail been allowed. In his signing statement, he wrote that light rail would have "greatly increased the cost to taxpayers in the long term," WISH TV indicated.

"The bill passed with support from a broad coalition of local officials, business leaders and environmental groups that argued a modern mass transit system is necessary to keep the region vibrant," adds Weidenbener.

Tim Maloney, senior policy director for the Hoosier Environmental Council, said the law will "help central Indiana move ahead in planning and building an environmentally-friendly and economically-valuable public transportation system for the region." 

According to Barb Berggoetz and Tony Cook of The Indianapolis Star"...it's unlikely local governments will move to bring the issue to voters this November. Many expect it to take at least until 2015 before voters will get a chance to weigh in." 

The law allows counties to raise local income tax rates by .1 to .25 percent to fund mass transit projects. In Marion County, local income taxes could rise from 1.62 percent to somewhere between 1.72 percent and 1.87 percent.

The day after signing the transit referendum bill, Pence signed a $400 Million Road Funding Bill. Unlike the transit bill, no referendum or new taxes is required in House Bill 1002 to increase spending on roads (see Planetizen: "In Indiana, Highway Building Is an End in Itself"). Money need only be transferred from the state's general fund.

Correspondent's note: In Oregon, which has no sales taxes, Portland's Tri-Met operations are funded by a Transit Payroll Taxes for Employers," paid by employers, not employees.

Wednesday, March 26, 2014 in Nuvo

courses user

As someone new to the planning field, Planetizen has been the perfect host guiding me into planning and our complex modern challenges. Corey D, Transportation Planner

As someone new to the planning field, Planetizen has been the perfect host guiding me into planning and our complex modern challenges.

Corey D, Transportation Planner

Ready to give your planning career a boost?

View of dense apartment buildings on Seattle waterfront with high-rise buildings in background.

Seattle Legalizes Co-Living

A new state law requires all Washington cities to allow co-living facilities in areas zoned for multifamily housing.

December 1, 2024 - Smart Cities Dive

Times Square in New York City empty during the Covid-19 pandemic.

NYC Officials Announce Broadway Pedestrianization Project

Two blocks of the marquee street will become mostly car-free public spaces.

December 1, 2024 - StreetsBlog NYC

'Vertical canyon' on glass-clad residential high-rise in Denver, CO.

Denver's New High-Rise Integrates Vertical Canyon in Architectural Design

Unlike other new builds in Denver, Colorado, a new high-rise reveals a unique “sculptural canyon” running vertically through the facade to foster a sense of community and connection to nature.  

November 29, 2024 - designboom

View of snowy buildings and mountains in background in Denver, Colorado.

Federal Resilience Program a Lifeline for Affordable Housing Providers

The little-known Green and Resilient Retrofit Program funds upgrades and repairs that improve efficiency and comfort in existing housing stock.

3 hours ago - Next City

Woman rides bike on paved walkway through plaza in Fort Worth, Texas.

Fort Worth To Relaunch Bike Share System in January

Trinity Metro shuttered its current system at the end of November and plans to relaunch with a mostly-electric system.

4 hours ago - KERA News

Blue Kansas City transit bus on Main Street, Kansas City, Missouri.

A Brief History of Kansas City’s Microtransit

The city’s costly experiment with on-demand transit is yielding to more strategic investment.

5 hours ago - Bloomberg CityLab

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.