How to pay? Income tax needed for $110 million roadwork plan, $20 million jail project

Workers in Johnson County could have hundreds of additional dollars taken out of their paychecks annually to help pay for roadwork in the county and an expansion of the county jail — work expected to cost more than $130 million in the next five years.

The Johnson County Council unveiled an income tax increase proposal to fund $110 million in road, bridges and infrastructure improvements across the county, mainly due to the construction of Interstate 69, and an estimated $20 million jail expansion project that would address a frequently overcrowded jail that the state has ordered the county to fix.

The proposal lays out multiple income tax options the council is considering to meet the infrastructure and criminal justice center needs of the county. Currently, Johnson County workers pay a 1 percent income tax rate.

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The tax hikes would be paid by people who live in the county. In all, a household with a combined income of $75,000 would pay about $380 to $429 more per year in the early years, before the rates begin to drop. Residents already pay a 1 percent local income tax. The proposals would increase that to about 1.5 percent, based on which options are chosen.

County officials are considering a mix of options that all include income tax increases, but the specific proposals differ in the amounts, whether other local governments would get any of the money and limitations on how the money can be used.

The proposals can be approved separately, as the jail funding and the roadwork funding are not tied, but county officials want the public to be aware of the coming needs and know that they are trying to look at the issues in their entirety and present the funding options that are best, Johnson County Council member Rob Henderson said.

Both options would maintain the county’s ranking as having a very competitive income rate for the region, he said.

None of the proposals have been approved, but debate and decisions are expected in the coming months.

“Big dollars, bigger than I would suspect our council has probably ever contemplated, a long time coming for infrastructure projects of this scale and scope within our jurisdiction,” Henderson said.

County council members have been searching for ways to pay for multiple needed projects in the county. The county has to find $110 million over five years to do needed improvements and to ready roads in the county for increased Interstate 69 traffic and the state has ordered the county to fix an overcrowded jail.

Residents who receive Social Security income would not pay any of the increases because that income is exempt from the local income tax.

Jail funding

The 250-bed expansion for the Johnson County jail is being designed, so a final cost estimate has not been determined, but officials are planning to spend about $20 million on the project. To pay for the work, a .20 percent income tax increase for Johnson County residents to cover the cost of the jail and the increased operational costs is being considered.

The tax would be in effect for 20 years, but the rate would drop to .1 percent in 2023.

In the first years, that tax hike would bring in about $9 million more per year, and the county could use the money to pay for the added costs of staffing and operating a bigger jail. In future years, the money could be used for other correctional facilities, such as community corrections.

Johnson County’s jail routinely has more inmates than beds. In March, the county commissioners approved hiring RQAW Corp., a Fishers-based architect and engineering firm, to design the jail expansion.

Roadwork sticker shock

Interstate 69 is being built through northwest Johnson County, and the interchanges are expected to increase traffic on already-busy roads in the Center Grove area. County officials are considering two income taxes to raise money to pay for more than $110 million in roadwork needed by 2024. More than $90 million of that is needed for high-priority roadwork related to Interstate 69, and about $19 million would be earmarked for bridge projects across the county.

After those projects are completed, the county needs about $130 million more money for road projects across the county.

The options are:

An economic development income tax increase of .35 percent. Of all the money collected, cities and towns would get to keep a share. The county is asking for cities and towns to support and approve returning 65 percent of their increased collections to the county.

A combined economic development income tax increase of .21 percent and a local income tax increase of .20 percent. Under this proposal, other entities such as the county library system, townships and fire protection districts would get some of the money through the local income tax rate. This proposal would provide some new funding to the county library system, which wants to build new branches and remodel others, and to fire departments, which have said they need to hire more firefighters.

Officials are studying what needs to be done to roads in the Center Grove area to accommodate traffic once Interstate 69 is built along State Road 37. Three interchanges will open at County Road 144, near Bargersville, Smith Valley Road and County Line Road. While the state is building the interstate, the county has to improve local roads and complete other local road and bridge work at an estimated cost of about $110 million over five years.

The economic development income tax is estimated to bring in about $12 million annually, with the county using the cash brought in to fund the road projects.

The county will then likely borrow money in late 2022 or early 2023 and use the tax income to pay back the debt, Henderson said.

The Johnson County Council is looking over each proposal and is expected to make decisions later this year. The tax to cover the criminal justice center would need to be voted on by June and the tax to fund the infrastructure needs a vote by September, Henderson said.

If an increase in taxes passed the county council, taxpayers will begin to see the money taken out of their paychecks in October with the money dispersed to the county in January of 2020, Henderson said.

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Here is a look at the additional amount local households would pay annually until 2024 under the income tax proposals the Johnson County Council is considering. At least one of the tax rates would drop after the first five years.

Residents already pay a 1 percent local income tax.

Criminal Justice Center income tax, economic development income tax and the local income tax:

$30,000 household income: $172

$50,000 household income: $286

$75,000 household income: $429

$100,000 household income: $573

$150,000 household income: $859

$175,000 household income: $1,002

Criminal Justice Center income tax and the economic development income tax

$30,000 household income: $153

$50,000 household income: $255

$75,000 household income: $383

$100,000 household income: $510

$150,000 household income: $765

$175,000 household income: $893

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Johnson County jail expansion

Plan: Expand the existing 322-bed Johnson County jail by building an 250-bed expansion project at the same property, connected by a skywalk.

Cost: Rough estimates are for $20 million to construct the project, and an additional $3 million to operate the expanded facility, in addition to the annual $5 million cost to operate the existing jail.

County roadwork

Bridges: Repair or rebuild more than 25 bridges and culverts across the county at an estimated cost of $19 million.

Interstate 69 impact: Spend $91 million readying local roads for increased traffic due to Interstate 69 construction in the Center Grove area

Future: Future county-wide road projects