The Jefferson County Council held a first reading of the proposed Wheel Tax ordinance on August 26th. Thankfully, the Council was most accommodating to receiving public comments. Thank you to all the citizens voicing their concerns.
At the Aug 28th meeting, the ordinance was again read into the record, A motioned to waive a third reading and to approve the ordinance was seconded. The ordinance was approved 4-3 vote with Ray Denning, Chris Shelton, Pam Crozier, and Heather Foy voting in favor of taxing county taxpayers.
Thank you to councilmen, Dwayne May, Gary Copeland and Ray Black for hearing and acting on behalf of your constituents by voting against the ordinance to increase taxes.
What's this Wheel Tax?
In a nutshell, through no fault of their own, counties are being coerced to adopt a motor vehicle and excise tax to make up for a portion of the deficit funding resulting from the property tax savings our state lawmakers claimed victory over and over again.
House Enrolled Act (HEA) 1461, passed by the Indiana General Assembly 5/1/2025, includes major updates to Indiana’s local road funding system.
The state mandates that the funds collected from this tax be used to construct, reconstruct, repair, or maintain streets and roads under the city’s jurisdiction. It links larger Community Crossings Matching Grant awards to counties that adopt both a wheel tax and a local excise surtax. However, the county has until June 2026 to enact the tax if it wants full eligibility when the new requirements take effect in 2027.
It's Complicated is No Excuse
Confusion reigns in interpreting the new law. As if this is not already complicated enough, the city of Madison passing the maximum allowed Municipal Wheel Tax on 8/5/2025. The City Council did this knowing full well that if the county also adopted the same tax that City residents would have to pay both taxes.
County Council members stated there was no prior communication from the city before Madison held a first reading on the wheel tax in July and that there was no opportunity to initiate a joint session. This does not explain why the county waited weeks to do anything.
The County Council insists they had no time to invite the public to an information session with the last-minute scheduling of this draft ordinance which does propose the minimum tax to help mitigate the duplicate tax burden on city taxpayers.
Transparency and Accountability?
The state minimum tax rates proposed in the ordinance were not discussed in either public meeting. So, when did the council make this determination?
The Auditor confirmed that as a matter of practice, the council has not published draft ordinances on the county website, but this should be revisited since the public had no opportunity to review the ordinance. Curiously, the proposed Ordinanace Number changed from 2025-202 on the 26th to 2025-207 at the second reading.
The council was called out for ramrodding the last-minute scheduling of the required meetings before the state imposed deadline before 9/1/2025 and for their lack of public engagement. The council insists that the state senate made subsequent changes mandating counties must enact the tax before 9/1/2025 or be penalized $500k. According to HB1461, which was signed by the governor states the county has until June 2026 to enact the tax if it wants full eligibility when the new requirements take effect in 2027.
One thing is for sure, there is plenty of confusion surrounding the new tax law requiring clarification and revisions from our state law makers. At a minimum they need to remedy the double stacking of this tax on municipal tax payers.
County-Enacted Wheel Tax and Excise Surtax Estimates
Local Option Highway User Tax (LOHUT) is often used to describe the Wheel Tax and Excise Surtax. The following charts represent both taxes as a single value described as LOHUT. The charts use 2023 data as a base for the hypothetical tax estimates for county-enacted ordinances. Clear as mud?
