A taxing debate

IndyGo offers new scenario for Red Line service as council considers income tax

By Marianne Coil

Southside residents now have two timetables for construction of the Red Line bus rapid transit (BRT) system, if the Indianapolis City-County Council approves a 0.25 percent local income tax to pay for expansion of IndyGo services. The council will vote on adoption Feb.27.

Pending council action, the Red Line will commence service in late 2019, if IndyGo fails to receive a Small Starts grant of $75 million from the US Department of Transportation. The original goal was to have service by late 2018.

The federal grant is not under consideration by Congress at this time, according to a statement from 7th District Congressman Andre Carson (D) on Feb. 5. Although former Pres. Barack Obama had urged support for the grant, time ran out. Congress did not appropriate 2017 budgets before adjourning last year.

When voters weighed the referendum supporting the local tax increase, they were encouraged to count on the federal grant to finance the BRT system, eventually to include Washington and 38th streets.

The fiscal year began Oct. 1 under a continuing resolution, which ends in April. So far, the Trump administration has not resubmitted the proposal, according to Rep. Carson. He said if necessary, he would seek inclusion of funding in the 2018 budget and work with local authorities to identify other sources of grant money. 

Phase 1 of the Red Line is to run from Broad Ripple to the Univ. of Indianapolis. Shelby Street would be the main BRT artery on the Southside. Even if the federal grant for capital costs is not available, IndyGo can deliver the proposed improvements and “maintain a positive cash flow for 20-plus years,” according to IndyGo CEO Michael Terry, who summarized the updates in late January.

The views of two Southside members of the council reflect varied degrees of optimism about the transit plan. Councillor Frank Mascari (D), whose district east of Madison Avenue runs north to south from Prospect Street to Hanna Avenue, expects the federal grant to be approved this spring and that the council will vote to adopt the local tax. Mascari said 51 percent of voters in his district supported the referendum. 

But south of Thompson Road west of Shelby Street, voters expressed “a close ‘No’,” according to Councillor Scott Kreider (R). He said IndyGo hasn’t done a good job explaining how fares will yield the required percentage of system revenues. A statutory requirement says 25 percent of IndyGo’s funding must come from the fare box.

Kreider also questioned the wisdom of increasing IndyGo’s debt service through the issuance of bonds. According to Terry’s summary, without the key federal grant, income tax bonds would finance the majority of BRT construction costs. 

When the tax increase was promoted to the public, IndyGo officials emphasized the tax was not for BRT construction, but for expansion of regular bus service that would connect to the BRT grid. Yet according to Terry’s report, if IndyGo has to issue bonds, then payments for debt service are included in the overall operational budget supported by the transit tax.

IndyGo spokesperson Lauren Day said fares are under review, but that to keep pace with inflation, an increase of 25 cents would be needed every eight years. She declined to say when fares would change.   

Day said the BRT system is feasible without the Small Starts grant because costly changes to curbs, streets, signals and shelters are scaled back under the scenario lacking the $75 million.

However, Kreider said he still has an open mind about the proposal and has spoken with many constituents who favor it. A small portion of his district’s eastern edge would include the Red Line extension to County Line Road.

Before the final council vote, Kreider and seven others, if all are in attendance, will review the plan at an open meeting of the Rules and Public Policy Committee at a special location in the district of Council President Maggie Lewis. The field meeting Feb. 21 was confirmed by Lewis’ spokesperson, Denise Herd.

The committee will meet at New Wineskin Ministries, 4501 W. 38th St., in Indianapolis, Herd said.

The committee could table the measure, or send it to the full council with a do-pass or a do-not-pass recommendation. Four councillors who co-sponsored the transit proposal are among the eight committee members.