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

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

June 11, 2025 - Diana Ionescu

Metrorail train pulling into newly opened subterranean station in Washington, D.C. with crowd on platform taking photos.

Congressman Proposes Bill to Rename DC Metro “Trump Train”

The Make Autorail Great Again Act would withhold federal funding to the system until the Washington Metropolitan Area Transit Authority (WMATA), rebrands as the Washington Metropolitan Authority for Greater Access (WMAGA).

June 2, 2025 - The Hill

Large crowd on street in San Francisco, California during Oktoberfest festival.

The Simple Legislative Tool Transforming Vacant Downtowns

In California, Michigan and Georgia, an easy win is bringing dollars — and delight — back to city centers.

June 2, 2025 - Robbie Silver

Color-coded map of labor & delivery departments and losses in United States.

The States Losing Rural Delivery Rooms at an Alarming Pace

In some states, as few as 9% of rural hospitals still deliver babies. As a result, rising pre-term births, no adequate pre-term care and harrowing close calls are a growing reality.

5 hours ago - Maine Morning Star

Street scene in Kathmandu, Nepal with yellow minibuses and other traffic.

The Small South Asian Republic Going all in on EVs

Thanks to one simple policy change less than five years ago, 65% of new cars in this Himalayan country are now electric.

7 hours ago - Fast Company

Bike lane in Washington D.C. protected by low concrete barriers.

DC Backpedals on Bike Lane Protection, Swaps Barriers for Paint

Citing aesthetic concerns, the city is removing the concrete barriers and flexposts that once separated Arizona Avenue cyclists from motor vehicles.

June 15 - The Washington Post