Below is testimony presented to the House Roads and Transportation Committee by AFP Indiana State Director Chase Downham during a hearing for HB 1011, which clears the way for a $1.3 billion Central Indiana Mass Transit project that would raise income taxes on Hamilton County residents by 18% and Marion County residents by 30%. You can find more information about this bill and our position by clicking here.
Mr. Chairman, members of the committee, good afternoon. My name is Chase Downham and I am the Indiana State Director of Americans for Prosperity.
AFP is an organization of 40,000 Hoosiers activists located across our state in all 92 counties. We support economic freedom through free market and limited government principles. One of our key goals, and the reason why we are here today, is to help protect taxpayers from wasteful government spending and higher taxes.
Americans for Prosperity opposes House Bill 1011. We believe that now is not the time to raise taxes on local Hoosier families through a mass transit tax increase. We are also troubled by the cost and size of the transit plan which we believe will place a huge burden on taxpayers for decades to come.
At first glance the numbers seem pretty clear. The transit plan will cost taxpayers $1.3 billion initially to build the system over a ten-year period. Beyond this date, operating costs will measure $136 million annually in order to operate the system.
The sources for this revenue include the .3 % income tax hike as described in HB 1011, but it also includes a few sources that we think are worth mentioning. According to a 2011 article by the Indianapolis Business Journal, $600 million will be sought in federal funds to build the transit system. Because of the current situation in Washington, including the sequester and divisive spending negotiations, we think taxpayers would like to know if this money is indeed still available. The $600 million is already a cost to taxpayers, but the burden locally will be that much greater if this huge source of money does not come through.
The IBJ article also mentioned the issuing of a $500 million long-term bond to help pay for the initial phase of the project. This is a substantial burden on taxpayers and hides the true cost of the plan. After interest, the long-term cost of this long-term bond is something we think is worth exploring.
Finally, these numbers do not include the plans to build beyond the initial two county system. Ultimately, the transit plan seeks to branch out into Boone, Hendricks, Morgan, Johnson and Hancock counties. The total dollar figure does not seem to be currently provided, but we have to imagine it will be substantially greater than what we are discussing here today.
The unforeseen costs of mass transit systems are well documented. According to Randall O’Toole of the Cato Institute, a leading scholar in the area of transit issues, transit proposals that include light rail on average can cost upwards of 40% more than originally estimated and service over 35% fewer passengers than often projected. Higher costs and fewer passengers, means even more burden placed on the backs of taxpayers.
And that brings me to what I would imagine is a question many have here…Why not let the taxpayers in Hamilton and Marion County make this decision for themselves.? We believe that if given all the facts and presented both sides, taxpayers would reject a local option income tax increase. However, this open and honest debate on the facts may be hard to generate. I am sure that many of you have heard the advertising currently being paid for by the Indianapolis Metropolitan Planning Organization, a government entity. Taxpayer dollars being used to obtain more taxpayer dollars is troubling enough. But a mass media effort assisted by taxpayer dollars on such an important issue as this is particularly troublesome.
We are also concerned about the desire by some supporters to put this issue up to vote on a November 2013 ballot. Without any other reason to have a November ballot, this is not only an unnecessary cost to taxpayers but will also limit who will actually come to vote on such an important issue. Using a 2010 study by the Indiana Fiscal Policy Institute, we estimate that the cost of the special election could be as much as $1.2 million. Another substantial cost to taxpayers.
For all these reasons, the Indianapolis mass transit proposal quickly becomes a massive tax burden. You are currently being asked to help initiate the process for a local option income tax hike of 30% in Marion County and 18% in Hamilton County. Add in these other issues and this tax increase alone will not nearly be enough for the tax behemoth coming our way.
Again, we urge the committee to oppose House Bill 1011 and protect taxpayers from this unwise investment.