Lawmakers endorse transit proposal, tax plan

Key lawmakers endorsed a Central Indiana mass transit proposal Thursday that could lower the proposed cost of expanding mass transit and shift a portion of those costs from the shoulders of income tax payers to businesses and transit riders.

Sen. Pat Miller, R-Indianapolis, who drafted the proposal based on public input and plans to introduce it in the 2014 Indiana General Assembly, said she believes the more conservative approach to taxing income and sharing of the burden may find support where past mass-transit efforts have failed.

Miller proposes allowing county councils in Marion, Hamilton, Johnson, Madison and Delaware counties to seek their own voter referendums to fund and build a new transit system.

If approved by voters, the councils could then impose an economic development income tax between 0.1-percent and 0.25-percent on workers, which is less than the 0.3-percent income tax increase that transit advocates had lobbied for the past two years.

Income taxes would pay for the expansion and 65 percent of the cost to operate the transit system. But under the new proposal, corporations would have to pay taxes to cover 10 percent of the operating costs through either an income tax or employee tax. And passenger fares would have to cover 25 percent of the cost.

Miller left the specifics of what type of transit system to build to each county.

Previous mass-transit efforts calling for a 10-year, $1.3 billion overhaul in Hamilton and Marion counties have failed to find a majority of legislative support the past two years. That plan would have included doubling the size of IndyGo, building two Bus Rapid Transit routes and adding a BRT route or rail line from Noblesville and Fishers to Downtown Indianapolis along the Nickel Plate rail line. BRT — high-speed buses with limited stops — is increasingly being used in cities across the country as a lower-cost alternative to rail.

Miller has been working to build consensus on transit among lawmakers this year, and the House-Senate committee studying transit voted 12-1 in favor. Only Rep. Mike Speedy, R-Indianapolis, who represents southeast Marion County, voted against against the plan, saying he's concerned about the tax burden.

Sen. Luke Kenley, R-Noblesville, chairman of the powerful Senate Appropriations Committee, said local chambers of commerce, the Central Indiana Corporate Partnership and area business have been lobbying the general assembly to approve transit legislation for years, and he believes they need to have a stake in the game. Kenley long has been skeptical of transit.

While the Republican-controlled General Assembly has been reducing or eliminating various taxes on businesses for the past several years, Kenley believes a higher business tax, in this case, is appropriate.

"We felt that they had some stake in this and have advocated strongly for it," Kenley said, "and so we didn't think that asking for them to pay 10 percent of the operating cost would be out of line."

Kevin Brinegar, director of the Indiana Chamber of Commerce, said he needed to study the proposal, but he's concerned corporations would not have a say in the referendum. However, Brinegar said the support in general among businesses for transit is real.

"We'll have to analyze (the tax plan) before we have any real comments to make, but I think the support from the business community is there and it is strong. I don't think, for the business community as a whole, that that's necessarily going to be a deal breaker."

Ron Gifford, executive vice president of the Central Indiana Corporate Partnership, the leading advocate for the transit expansion, said the proposal is a positive step forward. He said he needed to undertake a financial study to find out how much money the proposal would raise and how significant of an expansion it would fund.

"The details will have to be worked out," he said. "I think it's a constructive framework and I'm grateful that the committee agreed that funding mass transit is an important thing to do."

He is part of a coalition pushing for a 10-year, $1.3 billion overhaul in Hamilton and Marion counties that's failed to find a majority of legislative support the past two years. The plan would include doubling the size of IndyGo, building two Bus Rapid Transit routes and adding a BRT route or rail line from Noblesville and Fishers to Downtown Indianapolis along the Nickel Plate rail line. BRT — high-speed buses with limited stops — is increasingly being used in cities across the country as a lower-cost alternative to rail.

The coalition has proposed allowing residents to decide through a referendum whether to raise their income taxes by up to 0.3 percentage points to build and operate the entire transit system.

In Marion and Hamilton counties, that tax would amount to roughly $10 to $15 per month for the average worker and would pay for most of the roughly $700 million local share of the two-county plan. Other counties could have opted in over time with their own expansions and funding.

Community, religious and business leaders have been lobbying the legislature to approve a funding plan to expand mass transit for several years, arguing improved service would reduce traffic congestion, provide access to jobs, boosts economic development and ease commutes.

Critics, though, have successfully argued that the entire community should not be forced to shoulder the cost of a system that would benefit only a few.

Chase Downham, Indiana director of Americans for Prosperity, which has fought against increased taxes to expand mass transit, said in a news release Thursday that the transit committee's compromise may look new, but it includes much the same proposals as before.

"With this proposal, not only will the citizens of central Indiana continue to face potentially higher taxes, job creators could now be facing higher taxes as well," Downham said a news release.

Call Star reporter Chris Sikich at (317) 444-6036. Follow him at Twitter.com/ChrisSikich.