INDIANAPOLIS | With his city's bus system running on financial fumes, Hammond Mayor Thomas McDermott Jr. finds little fault with a legislative plan to bankroll a regional transportation system with a limited local income tax.
"I'm a supporter of regional busing. I think our current system is failing us," he said. "In Hammond, 97 percent of my residents have a car and don't need public transportation. But it's that few percent of our population that needs the most help, and I think we have a responsibility as government to provide that service."
House Bill 1607, which has Porter County officials calling for a tax "revolt," would create a regional transportation district to oversee bus and commuter rail service in Lake, Porter, LaPorte and St. Joseph counties.
"I think it would create jobs in building faster transportation systems," said House Speaker Pat Bauer, D-South Bend. "The real struggle would be the taxation by a wider organization."
The transit district could impose a local income tax of up to 0.25 percent in each of the four counties, which combined could raise more than $50 million a year without prior approval from county councils. The taxes instead would be set by a nine-member board governed by one county council member and one commissioner from each of the four counties and a tie-breaking chairman appointed by Gov. Mitch Daniels.
The Lake and Porter County income taxes potentially could cover the $350 million over 25 years that state Rep. Chet Dobis, D-Merrillville, estimates is needed to extend South Shore rail lines to Lowell and Valparaiso.
But the proposal has led the Porter County Council to consider ending its $3.5 million annual contribution to the Northwest Indiana Regional Development Authority. Supporters expect the RDA, created in 2005, to contribute $150 million to the $1 billion rail expansion, with federal funding eyed for the remaining $500 million.
The new regional transit district also would absorb the assets and employees of municipal bus systems in East Chicago, Gary, Hammond, and South Bend starting Jan. 1 and create a four-county bus system.
The move would save Hammond about $1 million a year, alleviating a roughly $4 million revenue shortfall the city faces next year because of state property tax caps. Similar savings would be realized in East Chicago, which offers bus rides at no charge, but city transit officials could not be reached Friday for details.
The bus agencies in Gary and South Bend directly levy property taxes. Legislative analysts predict that collapsing those agencies into a regional system would cut property taxes by $1.3 million a year in Gary and $3.7 million in South Bend.
