Strategy to Fund Regional InfrastructureLocal Income Tax Increment Allocation Concept

BOONEHAMILTON

MADISON

HANCOCK

SHELBYJOHNSONMORGAN

HENDRICKS

MARION

11,000 to Marion2,900 to Boone

55,000 to Marion15,000 to Hamilton

6,000 to Marion900 to Madison

15,000 to Marion2,900 to Hancock

4,000 to Marion900 to Shelby27,000 to Marion

7,000 to Johnson11,000 to Marion1,200 to Morgan

33,000 to Marion10,00 to Hendricks

2

REGIONAL COMMUTING PATTERNS

In total, 161,500 workers (23%) who work in Marion County every day commute from surrounding counties.

Wages taxed via the local income tax, are taxed by the county of residence.

Source: IT-40 data compiled by the Indiana Business Research Center

3

Distribution of Vehicle Miles Traveled among Central Indiana Counties (2016)

Includes Non-Interstate Freeway, Major Arterial, Minor Arterial Roads Vehicle miles traveled

(VMT) data is published by INDOT for all counties.

VMT is a proxy for the use of infrastructure and the costs required to sustain the transportation network.

Only non-interstate freeways, principal arterials and minor arterials (major thoroughfares) are included because of their role in intra-regional transportation.

VEHICLE MILES TRAVELED

2%

3%

4%

6%

6%

7%

7%

17%

48%

0% 25% 50%

Shelby

Boone

Hancock

Morgan

Madison

Hendricks

Johnson

Hamilton

Marion

Source: INDOT

4

INFRASTRUCTURE FUNDING

Annual Indianapolis Infrastructure Funding by Source

$

$100

$200

$300

$400

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Est 2020 Est 2021 Est 2022 Est 2023 Est

$ M

illio

ns

Taxes Special Income Tax Distribution Bonds Other Revenues Rebuild Indy TIF Target ($160 M)

Source: Indianapolis Office of Finance and Management

Includes revenues dedicated to:• DPW Transportation Improvement Program• Transportation Maintenance and Operations• Transportation Engineering

5

FOUR YEAR CAPITAL FUNDING PROJECTIONS

DPW Capital Program 2019 2020 2021 2022 2023 TOTAL

Funding Sources

LRS Construction Neighborhoods $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 25,000,000

MVH Construction Neighborhoods $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 25,000,000

New Funding | HB 1002 $ 10,000,000 $ 7,500,000 $ 4,250,000 $ 3,500,000 $ 3,500,000 $ 28,750,000

Gas Tax Funding $ 20,000,000 $ 17,500,000 $ 14,250,000 $ 13,500,000 $ 13,500,000 $ 78,750,000

City Cumulative - Transportation $ 560,000 $ 560,000 $ - $ - $ - $ 1,120,00

County Cum - Streets $ 4,240,000 $ 4,240,000 $ - $ - $ - $ 8,480,000

Parking Capital $ 3,700,000 $ 6,000,000 $ 4,000,000 $ 4,000,000 $ 4,000,000 $ 21,700,00

New Bonds ($120M ) $ 30,000,000 $ 50,000,000 $ 40,000,000 $ - $ - $ 120,000,000

New Funding | COIT Money $ 17,000,000 $ 5,000,000 $ 8,000,000 $ - $ - $ 30,000,000

BRT Money $ - $ 500,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 3,500,000

Other Local Funds $ 55,500,000 $ 66,300,000 $ 53,000,000 $ 5,000,000 $ 5,000,000 $ 184,800,000

Community Crossings Grant $ 1,933,359 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 5,933,359

Multi Modal $ - $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 4,000,000

LPA Federal Aid $ 17,326,658 $ 33,570,199 $ 21,986,897 $ 13,630,000 $ 19,070,659 $ 105,584,41

Indianapolis Neighborhood Infrastruture Program (INIP) $ 3,259,607 $ 4,000,000 $ 4,000,000 $ 4,000,000 $ - $ 15,259,60

Tax Increment Financing $ 12,200,000 $ 5,000,000 $ 9,240,000 $ 9,240,000 $ 9,240,000 $ 44,920,000

PPP/Grant/Donation $ 1,335,729 $ 40,000 $ 4,900,000 $ - $ - $ 6,275,729

External Funds $ 36,055,352 $ 44,610,199 $ 42,126,897 $ 28,870,000 $ 30,310,659 $ 181,973,107

Funding Sources Total 111,555,352$ 128,410,199$ 109,376,897$ 47,370,000$ 48,810,659$ 445,523,107$

2.3%

14.6%

2.0%4.9% 3.9% 3.0%

66.4%

1.3% 1.6%5.4%

27.0%

3.7%8.2% 7.5%

4.2%

39.4%

2.9% 1.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Boone Hamilton Hancock Hendricks Johnson Madison Marion Morgan Shelby

Wages Earned in the County

Income Taxes Collected by the County

6

CURRENT INCOME TAX DISTRIBUTION

Source:Wages: Woods and Poole estimate of wages earnedCollections: Indiana State Budget Agency; normalized to an equal tax rate

Approximately $130 million in taxes from Marion County wages are distributed outside the County

Comparison of Wages Earned vs. Income Taxes Collected in the 9-County Region

7

LOCAL INCOME TAX RATES

Local Income Tax Rates in Central Indiana Local income tax rates

range from 1.00% in Hamilton and Johnson Counties to 2.72% in Morgan County.

Marion County’s current income tax rate is 2.02%

In some counties, a portion of the income tax rate is dedicated to special uses, such as public transit, jails, or property tax relief [sometimes via bonding].

Each county in the 9-county region already imposes an “Expenditure Rate” for spendable income tax revenue of at least 1.00%.

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Marion Morgan Shelby Boone Hendricks Hancock Madison Hamilton Johnson

Property Tax Relief

Special Purpose

Economic Development

Public Safety

Certified Shares - Spending

8

POLICY FACTORS

1. Transportation infrastructure is a critical component to the growth of a regional economy.

2. The cost burden of critical infrastructure is shared unevenly across the region.

3. Vehicle miles travelled (VMT) or alternative metrics demonstrate the usage of infrastructure assets between and among Central Indiana residents.

4. A basic policy premise is: the users of infrastructure assets should bear the costs in relation to their usage.

-

20

40

60

80

100

120

Regi

onal

Inco

me

Tax

Base

(Bill

ions

)

9

A “TIF-Like” Income Tax ConceptTheoretical Base Year 2019

FRAMEWORK

Historical RegionalTax Base Growth

“Base” Established in 2019

A portion of the “incremental” increase will be allocated to the

Regional Infrastructure Fund

-

20

40

60

80

100

120

Regi

onal

Inco

me

Tax

Base

(Bill

ions

)

10

FRAMEWORK

Historical Tax Base Growth

“Base” Established in first year

Portion Allocated to Regional

Infrastructure

Portion of increment

distributed in “normal” fashion to

Counties

Illustrative Incremental “Set Aside” – How much to Allocate?

93 101

87

69

51 57 61 66 70 75

80

109

118

102

81

60 67

72 77

83 88

94

-

50

100

150

200

250

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Bond

ing

Capa

city

($M

Illio

ns)

Surrounding County Bond Proceeds

Marion County Bond Proceeds

11

CAPITAL FINANCING – MARION COUNTY SEPARATED

Approximate Annual Bonding Capacity – Bond Proceeds20 Year Term; 3.5% Rate (dollars in millions)

Potential annual bond proceeds

12

INFRASTRUCTURE FUNDING

Annual Indianapolis Transportation Funding –with Regional Infrastructure Proceeds

$

$100

$200

$300

$400

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Est

2020Est

2021Est

2022Est

2023Est

2024Est

2025Est

2026Est

2027Est

2028Est

2029Est

2030Est

$ M

illio

ns

Infrastructure Spending Regional Funding Bond Proceeds Target ($160 M)

13

VMT BASED ALLOCATION

Funding Contribution from Income Tax vs. VMT Based Distribution

3%

18%

5%

6%

6%

7%

46%

6%

3%

7%

33%

4%

9%

9%

3%

32%

2%

1%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Boone

Hamilton

Hancock

Hendricks

Johnson

Madison

Marion

Morgan

Shelby

Distribution Contribution