City council members are looking into whether a proposed new tax would generate enough money to repave most streets in Seymour.
By adopting a municipal wheel tax on the majority of vehicles registered in the city, some officials think Seymour stands to make much-needed road improvements.
Other council members are concerned with the idea of creating another tax on top of the state’s recent 10-cent gas tax hike and $15 increase in vehicle registration excise fees.
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During a discussion at Monday night’s council meeting, Councilman Brian D’Arco said he supports the wheel tax as a way to provide matching funds to access up to $1 million per year in road funding for the next four years from the state’s Community Crossroads grant program.
D’Arco said having $2 million to spend on roads can make a huge impact.
“You’ve seen what that can do this year,” he said. “That can actually pave a lot of roads. The city engineer seems to think that if we did that for the next four years, we could touch almost every bad road that we have inside city limits.”
The revenue from the wheel tax would not be enough to match $1 million, but D’Arco said even if it generates $150,000 to $200,000, it’s more than what the city started with.
In 2014, Seymour was spending about $150,000 altogether on road repairs and maintenance.
“I think if we can come up with one-fifth of the amount of money we need, at that point in time, we could work on trying to figure out how to come up with the other 80 percent,” D’Arco said. “We’ve got to look at our road conditions at this time and how to fund them. We’ve not been able to fund them up until this point.”
Mayor Craig Luedeman said the redevelopment commission may be able to contribute tax increment financing money to help with the city’s match for the Community Crossings grant.
Council President Jim Rebber said the council needs to have a better understanding of what kinds of funding needs might be coming down the road in both the city and county, including a future jail expansion project.
“What’s the impact going to be for our people?” Rebber asked. “I have concerns about whether it’s a regressive tax or not.”
A regressive tax is a tax that is imposed at the same level on everyone, regardless of income, like sales or property taxes and user fees.
“I’d rather see us take a total look at all the taxes,” Rebber said. “I’m not against the roads. They need to be improved.”
But Rebber said he would not vote in favor of adopting a wheel tax to pay for road work at this time.
Councilman John Reinhart said he also had concerns with implementing a new tax, especially with the possibility of using 25 percent or around $260,000 a year of the city’s EDIT funds to help pay for the jail project.
Currently, the city is still paying a portion for the 2000 jail renovation, but those payments end in 2019.
“I’ve got a problem with taxing the folks here in town on their cars and giving $260,000 away,” Reinhart said. “The county has addressed the road tax issue in the past with past county councils and haven’t done anything to help generate funds to loosen up some of their other funds.”
Reinhart agreed the wheel tax is a good way to generate money but said there are other things the council needs to think about before committing to raise taxes and still give part of the city’s income away.
“They’re both very good projects, and I can see that they both need to happen,” he said of the jail expansion and repaving city roads. “I just have mixed feelings about it.”
Councilman Shawn Malone said he asked several citizens their opinions about having a wheel tax and how it would affect them.
The tax would most likely be set at the minimum of $7.50 per axle, so $15 for a typical passenger vehicle. The amount would increase for larger vehicles with more than two axles, including RVs, trailers, tractor-trailers, car carriers, buses or large trucks. That would mean a household with two passenger cars would pay $30 per year.
“When the outcome is our streets getting repaired over the next four to five years, no one has told me that they dislike the idea,” Malone said. “It didn’t seem like such an astronomical number that they were against it.”
He also said he didn’t want to see the city lose out on the opportunity to receive up to $1 million in matching funds from the state’s Community Crossroads program, which is only being funded through 2021.
Malone suggested if the council agrees to implement the wheel tax, it should end at the same time as the Community Crossroads program.
In 2013, Luedeman said he didn’t expect the city to pursue a wheel tax, but that was four years ago, and circumstances have changed.
If the city is spending what it did in 2014 on roads, every road will be at the lowest possible rating, Luedeman said.
“I thought we needed a discussion about it,” Luedeman said. “I can honestly say I’m not a huge fan of adding another tax, but that’s my personal opinion.”
Luedeman said he would bring back more information to the council in July, including how many vehicles are registered within city limits and how much money could be raised by setting the wheel tax at different amounts.
Municipalities have until Sept. 1 to pass a wheel tax that would take effect Jan. 1, 2018.