Council passes 1st reading on city wheel tax

At its June meeting, the Greencastle City Council took the first step toward enacting a municipal motor vehicle license excise surtax and municipal wheel tax.

By a 6-1 vote (with Councilor Stacie Langdon dissenting), the Council passed Ordinance 2017-6 on its first of two readings, asking for the maximum rate of $25 in excise surtax on vehicles (cars, motorcycles and trucks with a gross weight that does not exceed 11,000 pounds) registered in the city and $40 in wheel tax on vehicles (buses, RVs, semi-trailers, tractors, trailers and commercial box trucks) not exempt from wheel tax and registered within the city.

Second reading and subsequent adoption of the ordinance could come as soon as the July 6 City Council session and must be passed by Sept. 1 in order to be effective on Jan. 1, 2018.

Voting in favor of the excise tax/wheel tax measure on first reading were Council members Dave Murray (who made the motion to go for the max rate, although it still could be amended on second reading), Gary Lemon (who seconded the motion), Adam Cohen, Mark Hammer, Tyler Wade and Steve Fields.

Langdon, who has said she is concerned about the effects the measure might have on low-income residents and fixed-income households, suggested instead that the city adopt it as a gradual increase, offering a compromise of $15 instead of $25 as a way to “stair-step it.”

Murray said he was “really sensitive to Stacie’s argument” and said he would be willing to amend his motion.

However, no one else saw that as necessary.

Noting that the tax is, in effect, a user fee for vehicle owners using city streets, Councilman Lemon reminded the group that the city needs funds to repair and maintain its streets and that this was one tool the state has provided. Otherwise, he noted, the state “has really constrained our ability to raise money.”

Council President Adam Cohen reminded his colleagues and the slim City Hall audience on hand that during previous discussion it was pointed out that the tax amounts to 50 cents per week.

An excise and wheel tax discussion was initiated near the end of the May City Council meeting when it was noted that state statute now allows any community of more than 10,000 population to adopt its own wheel tax.

When the municipal tax issues were raised during that discussion, Langdon pointed out that the state recently approved a 10-cent gasoline tax increase that will take effect July 1.

“The timing is terrible,” Langdon said of the proposed city ordinance.

According to a Purdue University study of such a tax, Greencastle could raise $300,952 in additional annual revenue by piggybacking on the county wheel tax to add an additional $25 per vehicle tax (city resident families with one car or pickup would see a $25 hike, those with two vehicles a $50 bump and those with three, a $75 increase over what they are currently paying for the county tax). Those proposed city rates would double what the county already has in place.

“Another $50 (per year) to be able to do something to fix the roads is a no-brainer for me,” Councilman Murray commented at the time.

Noting that the Purdue figures were based on 2015 numbers, Mayor Bill Dory said at the June meeting that taking the maximum rate could generate an additional $404,000 for the city. Those funds would have to be used exclusively on roads and streets.

Conversely, adopting the minimum rate would raise only $178,000, Mayor Dory noted.