Transit tax passes first council hurdle

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INDIANAPOLIS, Ind.-- A proposed transit tax to fund Marion County public bus service had its first vote by city-county councilors Tuesday evening.

To IndyGo and supporters' delight, the Rules and Public Policy Committee voted yes on the transit tax proposal.

Last fall, voters approved a .25 percent income tax increase, but it's not official until the council votes yes.

The committee's action sends the measure on to the full council for consideration next week.

While council members, especially Democrats representing central Indianapolis, have raised doubts about the wisdom of the tax which would almost double IndyGo’s $71 million annual budget, few felt a referendum that passed by a 60-40 percent margin at the ballot box would be turned back short of full council consideration.

"I support the plan for mass transit, but I think there’s some financial problems with this proposal," said councilman Gray, a Democrat representing District 8.

At stake is a new tax of $100 per $40,000 of annual income for Marion County wage earners and funding of the controversial Red Line bus service from Broad Ripple to downtown to the University of Indianapolis.

Congressional approval of a $75 million grant to pay for the Red Line has been delayed and could be scrapped in wake of President Trump’s new spending priorities. If it is, Marion County taxpayers and bus riders would shoulder the financial burden of the mass transit plan that relies heavily on federal funding for two-thirds of its costs.

That news shocked many who listened to IndyGo’s promises last fall that the tax referendum was not a vote to fund the Red Line but only its companion east/west feeder routes.

“The .25 percent income tax will fund the build out of the Red, Purple and Blue lines,” IndyGo’s Bryan Luellen told the full council during an informational session January 30th.

“The Red Line is going to destroy a good street in the city,” Councilman Joe Simpson said that night, reflecting concern about the future of College Avenue which runs through the heart of his northside district. “The bus that comes down College is empty and I don’t understand why we’re going to affect College.

“What about if you don’t get the federal money?” he asked. “And you said you can do all three of these transit transportation. I don’t believe that. And if you go over, you didn’t say that the city-council gotta pick up your debt. And where we gonna get money from if we’re broke. People gotta read that proposal. Its fiscally not sound.”

Luellen said even without the federal grant, IndyGo could afford the Red, Purple and Blue lines but the total build out would be delayed.

“It doesn’t seem like the numbers are adding up here,” said Councilman Monroe Gray, a democrat and chairman of the Municipal Corporations Committee which oversees IndyGo’s budget.

During the run up to last fall’s election, IndyGo and referendum supporters contended that businesses and corporations, which do not directly pay the new tax, would chip in to a newly constituted foundation to support the project as is required by the enabling legislation passed by the General Assembly.

“The statute also calls for ten percent of the new operating costs that come from non-fare non-tax revenue,” Luellen told the council that night. “Our board is working to establish a foundation and those funds would go to offset any operational expenses from an expanded system.

“We can operate the proposed network even without the ten percent but we will create that foundation.”

That was then, but two weeks later an IndyGo board member told a council committee that the foundation would not be created and the business community, which would benefit from improved transit service in real estate and property development, business expansion and job creation, would not be asked to help.

“The money that would go into that foundation is not an additional tax,” Greg Hahn told the Metropolitan Development Committee. “It's money that can come from advertising, it can come as part of the $54 million, and it's kind of unusual how it's been set up because it’s a directory which means, ‘We’re giving instructions on you need to do this, but if you don’t do it, nothing happens.’ It doesn’t invalidate the statute.”

Hahn said there would be no penalty if IndyGo failed to follow through on its promise to establish a foundation to accept corporate and business donations in order to lessen the financial responsibility on individual taxpayers and riders as state lawmakers intended.

“When the debates took place, they wanted the employers and employees to participate and pay a certain percentage of either wages or corporate profits to the bus, to IndyGo, to help fund this,” Hahn admitted, though he claimed that neither the legislative foundation requirement or IndyGo promise to seek business and corporate support were binding.

Council attorney Fred Biesecker disagreed, telling IndyGo reps that the statue is clearly titled "mandatory alternative funding sources", indicating they do have to find all ten percent from private sources.

During a meeting of the Municipal Corporations Committee a week later, Councilman Gray expressed further doubts about the advisability of approving the transit levy, which would go into effect October 1st, when he asked IndyGo CEO Mike Terry why Mayor Joe Hogsett had not made an announcement on whether he supported the new tax.

Terry said he didn’t know and Gray would have to ask the mayor.

The IndyGo boss’ answer to the councilman’s question indicated the leader of the bus system was unaware that Hogsett applauded the voters’ decision at the November ballot box to give his agency an additional $54 million a year and fund the high profile Red Line project.

“This year, voters were presented with an important question as to the future of mass transit in Indianapolis, and their answer was loud and clear,” read a statement from Hogsett’s office apparently written in the weeks after the November vote. “I applaud Council leadership moving quickly to act upon the will of the people by passing this historic investment in our city’s infrastructure.”

The committee and full council votes on the bus tax were on the minds of transit supporters and riders who gathered at the statehouse to celebrate Transit Day in an attempt to lobby lawmakers for more state funding.

Indiana’s $42 million a year in statewide transit assistance has remained unchanged since 2009, said Kim Irwin of the Indiana Citizens Alliance for Transit.

“Transit gets people to jobs,” she said, citing figures that claim every dollar of investment in transit yields four dollars in economic development and payoff. “We have employers across the state who can’t fill positions they have because people don’t have transportation to get there.”

Marion County voters were the first in the state to take advantage of the opportunity to pass their own dedicated tax and revenue stream for mass transit.

“The eyes are on Marion County and Indianapolis,” said Irwin, “to see how the referendum went in terms of funding transit or how it will go and how it will result in expanded service.”

City-County Council members are asking that same question.

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