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Chesterton council advances wheel-tax ordinance after lengthy road-funding briefing
Summary
Council held first reading of an ordinance to impose a motor-vehicle excise tax and municipal wheel tax, after staff outlined road-funding shortfalls, grant-match opportunities and an estimated revenue projection; council authorized moving the ordinance forward by voice vote.
The Chesterton Town Council held a first reading of Ordinance 2026-02 to impose a municipal motor-vehicle excise and wheel tax, after staff presented the proposal as a way to stabilize road funding and capture state matching grants.
Dan, a town staff member who presented the proposal, told the council that the excise portion (passenger vehicles) is capped at $25 per year and that the wheel-tax cap for larger vehicles is $40. He said a 2023 estimate suggested a capped wheel tax could generate roughly $344,732 and, when combined with a 50/50 Community Crossing Matching Grant (CCMG), could produce as much as $689,464 in funding for town road work.
"This tax can only be used on the roads," Dan said, describing required accounting and the town's practice of keeping separate funds for excise and wheel-tax receipts. He also noted the town currently receives about $300,000 a year in a restricted MBH fund for paving and that rising asphalt costs and limited throughput mean the town is falling behind on its paving lifecycle goals.
Council members asked about program rules and timelines. Staff said Indiana's lane-mile direct distribution (LMDD) and CCMG matching programs have requirements that can make a municipal wheel tax a condition of eligibility; Dan said municipalities that adopt a wheel tax may be eligible for LMDD distributions and that a May 1 deadline this year would affect which jurisdictions receive a share of the initial LMDD allocation.
Several residents raised concerns during public comment. Ray Griffith, a 40-year resident, said the tax would be unfair to low-mileage or antique-vehicle owners and estimated his own cost at about $250. Council members acknowledged those concerns but emphasized the scale of unmet pavement needs and the town's limited alternatives for securing matching funds.
Councilmember comments reflected caution and pragmatism: one member noted Chesterton historically opposed a wheel tax but said recent funding changes left the council little choice to protect road maintenance funding. The first-reading vote was conducted by voice; council recorded affirmatives from Councilman Ton, Councilwoman Fischer, Council President Collins and Councilwoman Darnell and the ordinance will return for further consideration.
If adopted at a future meeting, the ordinance would create dedicated revenue narrowly restricted to road maintenance and related infrastructure; the council also discussed options for setting reduced rates for motorcycles, RVs and trailers and the trade-offs between setting the cap high enough to capture matching funds and minimizing burden on residents.
