GREENWOOD, Ind. (WOWO): The city of Greenwood is considering a new vehicle excise tax that officials say would help pay for road improvement projects.

Under the proposed ordinance, vehicles registered in Greenwood would be subject to an annual fee of $25. Owners of larger vehicles, including buses, semis, and recreational vehicles, would pay $40 per year.

City officials say the additional revenue would be used for road repairs as changes to property and income tax funding create challenges for maintaining infrastructure.

Greg Wright, controller for the city of Greenwood, said officials want to avoid falling behind on road work and facing higher costs in the future.

“We don’t want to fall behind on road work and then have to pay more down the line,” Wright said.

The city currently receives about $1.5 million each year through the state’s Community Crossings Grant program, which requires local matching funds. Wright said officials believe having a municipal wheel tax could become a requirement to continue receiving those grants.

The Greenwood City Council approved the ordinance on first reading during Monday’s meeting. A second reading was delayed until next month.

If approved, the tax would take effect in 2027.

The proposal comes as other Indiana communities consider new vehicle fees to fund infrastructure. The Indianapolis City-County Council recently approved changes that will require most Marion County drivers to pay a $100 annual vehicle registration fee beginning next year. Officials estimate that plan will generate about $356 million over five years for road improvements.