POLITICS

Mass transit bill clears Indiana legislature, heads to governor

Tony Cook
tony.cook@indystar.com

After a long and winding road, a measure that would clear the way for an expanded mass transit system in Central Indiana won support from both chambers of the Indiana General Assembly during the final hours of the 2014 legislative session.

Senate Bill 176, which would allow six counties to have voter referendums on whether to fund mass transit projects primarily through income taxes, now goes to Gov. Mike Pence. The House voted 65-34 for the measure while the Senate voted 32-16.

The bill represents a major victory for transit supporters – Indianapolis Mayor Greg Ballard among them – who have been trying to pass transit legislation for at least three years.

Still, the compromises required to get the measure through the legislature may complicate the ability of local officials to sell a mass transit plan to the public.

As originally written, the bill would have required large businesses in Central Indiana to contribute 10 percent of the transit system’s operating costs through a new corporate income tax.

That provision created a tricky dynamic. Some senators felt the corporations should have “skin in the game” because business groups such as the Indiana Chamber of Commerce have pushed for an expanded mass transit system for years to help transport workers and spur economic development.

But the business community – including the state and city commerce chambers – lobbied to get rid of the corporate tax requirement, fearing it would set a precedent for a new, local business tax.

A new corporate tax also would have worked at cross purposes with a top Republican legislative priority: Cutting the state’s corporate income tax rate.

As a result, Senate and House negotiators reached a compromise on the measure. Under the deal, a House provision that would have allowed light rail and a Senate provision that would have taxed businesses were both removed.

Instead of the corporate tax, the legislation would set up a nonprofit that would have the goal of raising up to 10 percent of the transit system’s operating costs from the business community.

If the business community’s contributions fall short of that goal, local governments would have to make up the difference.

Conservatives in the legislature slammed that provision, noting that the business community has pushed hard for an expanded transit system.

“What happens when the 10 percent contribution isn’t met? Taxpayers are on the hook!” said Sen. Scott Schneider, R-Indianapolis. “What was a bad bill is now a terrible bill.”

Even supporters of the bill are quick to acknowledge it’s not perfect.

“I’m not here to tell you this is a perfect bill,” said the measure’s author, Sen. Patricia Miller, R-Indianapolis. “There’s been a lot of give and take through this entire conversation.”

The compromise legislation raises a key question: Will voters approve a mass transit plan when they can’t be sure precisely how much business will contribute and how much taxpayers will be on the hook for?

"That is a toughie. I would think it would be a tough sell, personally, but I could be wrong,” said Noblesville Mayor John Ditslear. “We have to work with the cards we have been dealt."

Mark Fisher, vice president of government relations for the Indy Chamber, said most businesses would already contribute to the mass transit system through individual income taxes.

He conceded that large corporations don’t pay individual income taxes. But he believes they will step up to support mass transit.

“If we do anything well in Indianapolis, it’s coming together to do what’s best for the community,” he said. “I do believe we’ll get support, not just from corporations but also small businesses, individuals and the philanthropic community.”

The negotiated bill — which applies to Marion, Hamilton, Hancock, Johnson, Delaware and Madison counties — also includes a provision that would allow townships to hold voter referendums on transit funding even if the county declines to do so. Qualifying townships would have to be adjacent to a county or township whose voters have already approved a mass transit plan.

That issue could complicate matters as well — but not necessarily in a bad way, said Christine Altman, a Hamilton County commissioner.

“I think it gives flexibility,” she said.

The important thing, for now, is that the General Assembly passed a transit bill at all, she said.

"Having the momentum to get through the Senate this year, it is very positive,” she said. “This may not be the best bill in imagination or vision, but it is something to get it going.”

Star reporters Barb Berggoetz and Eric Weddle contributed to this story. Call Star reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.