DALLAS – The voters of Indianapolis will decide the fate of an income tax increase to fund major public transportation upgrades.

The City-County Council that governs the consolidated governments of Indianapolis and Marion County on Monday agreed to put the question – whether to impose an extra $.25 on every $100 earned -- on the November ballot. The tax would be expected to raise approximately $56 million annually. The county would use some to fund projects on a pay-as-you-go basis and leverage a portion to support borrowing, according to the council's chief financial officer, Bart Brown.

The level of borrowing, if the measure passes, is not yet set.

Legislation passed by the state legislature in 2014 gives some counties in central Indiana the ability to raise the local income tax to provide a new funding mechanism for transit if voters agree.

Indianapolis Public Transportation Corporation, also known as IndyGo, operates the county's public transportation system. IndyGo has put a price tag on upgrades and an expansion of $390 million funded through a mix of local and federal funds and borrowing.

The new funding would finance improvements to the local bus network and three rapid transit lines on high-ridership routes. The upgrades are part of the Marion County Transit Plan that aims to bring high-frequency service that will increase service availability by 71% by 2021.

"Transit in Indy has historically been underfunded. There is a need for investment to meet our transit needs and we have created a plan which will spur continued economic growth and opportunities. Quality transit helps us maintain regional competiveness," stated Danny Crenshaw, chairman of the IndyGo board of directors.

Construction of the Red Line, a rapid-transit bus line that could eventually run from Westfield to Greenwood, will be financed by a $75 million federal Department of Transportation grant. The grant still needs budgetary approval from Congress, which could come in the fall. The red line construction is slated to begin in 2017 and would be completed sometime in 2018.

If the referendum fails, IndyGo plans to still move ahead with the Red Line construction. However, improvements to hours, service, connections, and wait times will be more difficult to make, officials said.

Brown said that IndyGo approached the council in March for authorization to issue up to $18 million in bonds but that plan is on hold until the fate of the referendum is sealed. "If it passes they won't need the $18 million; if it doesn't they will use the property tax-backed debt instead," Brown said.

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