Pros and cons of a county wheel tax

Recent articles in the Register have resurrected thoughts of a county wheel tax otherwise known as LOHUT (Local Option Highway User Tax.)  LOHUT is made up of two taxes- one- the excise surtax-  is for automobiles, motorcycles, and trucks under 11,000 lbs. The other - wheel tax- is for all other vehicles with exemptions for state and government vehicles, religious organizations, and non-profit youth organizations.  

Senate Enrolled Act 67 and House Enrolled Act 1001 added some carrots (money) for counties without LOHUT. Ironically, the carrot is actually a return of 50% of our own COIT (County Option Income Tax) money that the state has been withholding. I think a cushion is necessary on spending tax money- but a 50% cushion seems like outrageous overkill. According to the auditor the new cushion will be 15%.

The one time money being returned to our county via SEA 67 to get down to this new 15% cushion is $785,994.93.  75% of it MUST be used for local roads. The other 25% can be used for any lawful purpose. If it were my choice, the 25% would go for our current road slip repairs.

HEA 1001 provides $186 million over the next two years and $277 million over the next four years and ultimately $100 million a year for long term local road funding across the state.

With 92 counties that averages a little over $1 million each- assuming population and road miles were equal. This money can only be obtained as a 50% grant match and only using any of these 3 sources for our match. Choice One- Money from an increase in LOHUT- wheel tax and excise tax.

Choice Two- money as a special distribution of LOIT- or COIT that is coming back thru SEA 67. Choice Three- Local county rainy day fund. And one more rule - we have to have a transportation asset management plan- approved by the state. The state, unfortunately, did not standardize this asset management program which could have happened through Purdue that hosts annual “road school” for county highway depattment personnel. That might have eliminated 92 counties seeking out and paying for various versions of this computerized plan to be updated annually.
For the first year we can use the SEA 67 money - Choice Two. After that we could use Choice Three - rainy day fund money. But with the riverboat revenue decreasing, that fund will need more money sources. We don’t have a LOHUT in this county. Indiana has about 50% of their counties without LOHUT.

By now - you might be getting the idea that some official- namely our county engineer and our auditor- will be doing a lot of paperwork in order to fulfill the requirements of getting our own money back. And you are probably seeing that we may have to consider a LOHUT soon.

The cons of LOHUT are fairly obvious- it can be increased once enacted. LOHUT can be wasted if council and commissioners do not exercise self control. It’s ANOTHER tax on already burdened taxpayers. The wheel tax of LOHUT can also be used for a multiple county infrastructure authority. Ahh- there they go again mucking it up with other things to deplete money from the real purpose of LOHUT.

The biggest pro of LOHUT is that it is the only OPTIONAL tax specifically for LOCAL road funding. The state gas tax and the sales tax from gas have been diluted over the years to being spent on things other than roads. LOHUT seems to be more straightforward at least for the surtax portion on cars, motorcycles, and smaller trucks. LOHUT can be repealed or reduced. COIT could be reduced as LOHUT gets enacted. COIT- The county income tax is higher for residents than for non- residents who work here. That might be something worth addressing also.

We will have spent $22 million on our jail and the county courthouse annex. TIF districts are taking business tax revenue and using it within those areas earmarked for the next 25 years. LOHUT can’t be used for special purposes- just for roads and bridges.

Like most of you, I am no fan of taxes. But I am not particularly excited about driving on poorly maintained and unstriped roads and bridges. In our hilly terrain we have expensive maintenance issues with road slips on an emergency basis. Without increased riverboat revenue, what other long term solution do we have for upgrading and maintaining the safety of our roads?

Christine Brauer Mueller writes for The Dearborn County Public Forum @ She has attended county government meetings since 1995.