INDIANAPOLIS | The Republican-controlled Senate voted 38-12 Tuesday to compel Northwest Indiana residents pay more in vehicle taxes if they want smooth roads to drive on.
House Bill 1001, which contains the state's 2014-15 budget, requires counties adopt a vehicle excise tax surcharge or wheel tax to access $101 million in new local road funds.
Lake, Porter, LaPorte, Newton and Jasper counties do not currently assess either tax. In Marion County, home to Indianapolis, motorists pay an annual surtax equivalent to $35 on a new $25,000 car.
The author of the plan, state Sen. Luke Kenley, R-Noblesville, said it's only fair to require local governments obtain as much tax revenue as possible from local sources before seeking additional money from the state.
State Rep. Chuck Moseley, D-Portage, said a better description is that the state is holding Hoosiers' tax money hostage until they agree to pay even more.
The legislation now goes to a House-Senate conference committee where lawmakers from both chambers, including state Sen. Karen Tallian, D-Ogden Dunes, will hammer out a compromise tax and spending plan that must be re-approved by both chambers before it can go to the governor.
Other highlights of the Senate budget proposal include:
• A reduction of the state's income tax rate to 3.3 percent from 3.4 percent, a change that would return $50 to a family earning $50,000 a year. Republican Gov. Mike Pence wants the rate cut to 3.06 percent. The House budget did not reduce income taxes.
• Immediate elimination of the Indiana inheritance tax, which is set to be phased out by 2022, and continued reduction of the corporate income tax rate toward 6.5 percent.
• A $331 million increase in education funding. The House added $344 million. Pence sought a $137 million increase.