Time for Tough Love

The folks who live in Indianapolis’ suburbs are a lot like the kid who moved back into his parents’ basement after college, and despite having a job, doesn’t pay rent or contribute to the grocery money, so he has money to spend on a snazzy new car and vacations.

More than 180,000 suburban residents drive into Indy to work every day. Approximately 50,000 drive out to jobs located in the suburbs. That means we have a 130,000 net influx of people who regularly drive on streets paid for by Indianapolis taxpayers, rely on police protection furnished by Indianapolis taxpayers, flush toilets into sewers paid for by Indianapolis ratepayers…all without paying a penny for those services.

It isn’t just the people who drive into the city to work. Residents of the collar counties have easy access to Indy’s arts, sporting and cultural events and other urban amenities that improve their quality of life without affecting their property taxes. At least in those cases, nonresidents are patronizing important activities–and when they eat a meal in a downtown restaurant, they do pay a small surtax. Commuting contributes nothing.

Indianapolis business and political leaders have talked about imposing a commuter tax for at least thirty years. We discussed it when I was in City Hall. It hasn’t happened–hasn’t even been seriously pursued, to the best of my knowledge. The politically cynical and criminally shortsighted decision to include property tax caps in the state constitution may change that.

Local governments are starved for revenue. We don’t have the money to hire enough police, to maintain public parks, to pave streets and build sidewalks. Important public amenities like the canal are being allowed to deteriorate. The Mayor is trying to cope by selling off public assets–a “penny-wise, pound-foolish” effort that trades up-front money for long-term income streams and shortchanges our childrens’ futures.

Indiana does not have real home rule. Indianapolis lacks the legal authority to raise property taxes. We have to look elsewhere if we are to invest in our public infrastructure and keep our city from going the way of Detroit. We are rapidly running out of public assets to sell off. The logical thing to do is to levy a commuter tax–to insist that the people using our public services pay something toward their maintenance.

Mayor Hudnut used to warn against allowing the city to become a “doughnut” with a hole in the middle. Civic health, he insisted, required patterning ourselves after a “cookie,” solid clear through. Without sufficient revenue, all those suburban residents who depend upon Indianapolis for their employment and quality of life will find their property values diminished along with their job prospects.

It’s time to charge that kid in the basement some rent.


  1. I know that Cincinnati charges taxes on workers employed inside of the City’s boundaries.

    I wouldn’t mind taxes like that IF, and only IF, I could SEE a return of those monies into something that affects me, whether it be infrastructure, police presence, or something else tangible.

    Apparently, in Cincinnati, that isn’t the case.

    The monies go into funds that don’t clearly show a return. The roads are bumpy, one can get robbed by armed gunmen next door to the University of Cincinnati, and the City budget is a mess.

    Making the central city a more attractive place to live is my preference. Does that take taxing commuters to achieve? Maybe, or maybe it’s just getting the “less than top talent” off of the 25th floor?

  2. I agree with your premise but I believe you’re overstating our revenue problem. The property tax caps, at least from what I’ve seen, blindsided the townships by way of school funding more than anything else. Looking at revenue growth for the last 4 or 5 years things haven’t really changed all that much. I understand the logic of a suburban tax, but most people who live in the suburbs do it intentionally to get away from the runaway taxing/downward spiral that the city proper has become. Should the doughnut counties therefore be entitled to a seat on the CCC since they’re paying for it anyway?

    There has certainly been a great deal of suburban flight, IMHO because of a lack of police presence, the expansion of violent criminal activity into formerly yawn-esque neighborhoods, and schools that are more concerned about building indoor practice fields than they are discipline and instruction.

    It’s interesting reading to look at the proposed budget for next year and how much fluff there is compared to years past. Furthermore, how in the heck can you claim TIF districts are a good idea if you claim to be a fiscal conservative? I thought the Super Bowl was going to fix all of our money problems anyway. Oh wait, that’s right, the NFL and all of it’s employees are tax-exempt and didn’t have to pay taxes on their stay here. Whoops.

  3. Indianapolis is the nerve center which has spurred the tremendous growth in the donut. You are right that everyone ought to pay for their
    fair share of the city’s costs of roads, police, and firefighters.

    Another thing that would help the central city is for the state to pay local units of government
    “impact aid’ for the property that state government takes off the property tax rolls.
    IUPUI and state government buildings are on some of the city’s most valuable downtown property and are enjoyed by Hoosiers state-wide. State-wide taxes should reimburse the city and schools for the property taxes lost to state properties.

    A number of other communities around the state are similarly affected by state parks and state universities, so a legislative coalition might be put together to reimburse all such communities for the state facilities they host. That would cost the state some real dollars which the state doesn’t have either, but the state holds all the cards and should remedy the problems.

    Property tax caps have painted all local communities and schools into a corner. We’re going to need new funding sources or valuable
    infrastructure and services will be lost.

  4. When I worked in St. Louis city I was actually taxed for working there. I didn’t mind it as the tax was minimal and St. Louis city needed the money. I did recieve benefits of police protection and decent roads. It is just the price you pay; sometimes I wish they wouldn’t give so many tax credits to companies but I guess you do to draw them into your community.

  5. The solution is not to tax more, but simply keep more of what is already being levied. Simply allow counties to keep the COIT that is generated in their counties as opposed to traveling back across county lines.

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