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Boone County reviews wheel tax scenarios as road-funding gap looms
Summary
County staff presented wheel-tax scenarios showing a $5 minimum could yield about $585,000 countywide, with distribution rules and timing tied to state approvals; council members discussed how a wheel tax would interact with bonds and reduced CCMG funding and emphasized coordination with towns that could adopt their own wheel taxes.
Susan, a county staff member, presented potential countywide wheel-tax scenarios and the Boone County Council discussed how those options could replace shrinking state road funds and interact with planned bond decisions. "I have some wheel tax potential wheel tax scenarios," Susan said, and she gave the council estimates for flat-per-vehicle charges and how revenue would be split among the county and municipalities.
The discussion matters because state road funding that the county historically received—Community Crossings and related distributions—appears likely to shrink, and the county is weighing whether to offset that shortfall through a wheel tax, bonding or a combination of both. Under the county’s “minimum” flat-tax scenario, Susan estimated total countywide revenue of about $596,952 before a BMV processing fee and about $584,489 after the fee; the county’s share under the minimum example would be roughly $214,000.
Susan told the council the law requires adopting both a county excise surtax and a county wheel tax together; neither can be adopted independently. The statutes and administrative rules she cited set minimum and maximum per-vehicle flat amounts and allow higher maximums if the county has an approved asset-management plan (AMP). She summarized the ranges used in her analysis: a $5-per-vehicle minimum, a non-AMP maximum example of $25 (surtax) and $40 (wheel tax), and an AMP-eligible maximum example of $50 (surtax) and $80 (wheel tax).
Distribution of revenue would follow the same formula used for local roads and streets: 60% by population and 40% by road miles. Susan said the county used 2020 census population shares and 2023 road-mile data to allocate the sample funding. That formula means the relative splits among Boone County, Lebanon, Zionsville and Whitestown would not change with the chosen tax rate; those municipalities’ shares are fixed by the population and road-mile inputs.
Council members and staff raised several operational and equity concerns. Nick, a county staff member, noted that because population credits and road-mile credits are tied to municipal boundaries, a municipality that receives the credit may not be the entity that maintains the roads in practice. He said the county has in some prior years received compensation for maintenance it continued to provide to towns, but that compensation is not documented by written memoranda of understanding (MOU). Debbie, a county staff member, confirmed the county has historically received an informal payment to reflect the amount that otherwise would have gone to the town but said there is not a formal written agreement in place.
Council members also discussed timing and coordination. Susan said a wheel tax must be adopted by Aug. 31 to begin collections the following March; if adopted after that date and before year-end, collections would not start until 2027. Council members repeatedly urged staff to coordinate with Zionsville, Whitestown and Lebanon because municipalities may adopt their own wheel taxes that would “stack” on top of a county tax, meaning a vehicle owner could face both county and municipal charges.
The council tied the wheel-tax discussion to pending bonding work. One council member said the bond decisions could reduce or change the county’s revenue needs: "If we don't do the wheel tax maybe we need to be looking at different amounts or...if we do pass the wheel tax, maybe that can come down," the member said. Staff advised comparing likely bond proceeds, associated issuance costs and the wheel-tax revenue needed to achieve the same capital program.
No formal action or vote was taken. Council members directed staff to continue analysis and to coordinate with towns and the county’s bond advisers; they also planned further review during the August budget meetings once additional revenue estimates and bond scenarios are available.
Looking ahead, the council asked staff to provide written examples and to clarify how existing maintenance arrangements with municipalities could be made permanent (for example, through MOUs) so revenue distributions better reflect who maintains the roads.
