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Michigan City council advances wheel-tax proposal; workshop set for Aug. 18
Summary
The council introduced an ordinance to create a municipal wheel tax and associated excise surtax to unlock additional state paving funds. Mayor Angie Nelson Deitch and sponsors said the tax would allow the city to compete for an extra funding bucket; a public workshop is scheduled for Aug. 18 to explain rates and options.
The Michigan City Common Council on Monday introduced an ordinance to establish a municipal motor vehicle excise surtax and municipal wheel tax to allow the city to access additional state paving funds.
What the ordinance does and why: State program rules tie certain competitive pavement grants to a municipality’s adoption of a local wheel tax; council sponsors said adopting a small wheel tax and surtax would allow Michigan City to access "bucket two" funds for street repairs and match funds for Community Crossings or CCMG (Community Crossings Matching Grants) projects.
Mayor’s office summary Mayor Angie Nelson Deitch said the city has relied heavily on riverboat revenues for streets, but those funds have declined. She presented fiscal estimates from a 2024 Baker Tilly analysis showing revenue potential: at the statutory maximum ($40 wheel tax and $25 surtax) the city could generate an estimated $667,523 in additional revenue in a model year and additional amounts in subsequent years; she said staff will present a rate schedule so the council can consider lower options.
Public outreach and process The council set a public workshop for August 18 at 5:30 p.m. in the EOC Room to present rate options and comparable rates in neighboring communities. Sponsors said they expect to carry first reading now and pursue second and third readings at the next meeting to meet a state deadline for next-year funding consideration.
Notable comments Council sponsors and residents said they prefer a modest approach — several speakers urged a minimal rate to unlock grant eligibility without imposing a large new fee on residents. Council members asked staff to prepare comparative rate schedules used by neighboring cities and a projected revenue table at lower rate levels.
Next steps City staff will present detailed rate scenarios at the Aug. 18 workshop; the council indicated it intends to finalize readings at the next regular meeting to meet state program deadlines.
Ending note Council leaders framed the wheel tax as a tool to preserve pavement funding and reduce the need to draw further on riverboat reserves or cut services.
