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Gas taxes
Here’s the effects of various taxes included for a 15-gallon tank fill-up at $3.60 a gallon:
Federal excise tax…$2.76
State excise tax…$2.70
Sales tax…$3.40
Cost of fill-up…$54
Total taxes…$8.86 (16 percent)
(Note: Sales tax is not charged on the amounts going to excise taxes)
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With gasoline excise tax revenues falling, Hoosiers and their elected officials face a tough choice: Raise taxes or allow roads to deteriorate.
Editorials

Bad roads or higher taxes?

Hoosiers who depend on safe, convenient roads and streets are inevitably going to have to pay more for them.

If only state legislators and city and county officials statewide understood that.

As Niki Kelly’s Sunday story explained, the state’s excise tax on gasoline – 18 cents per gallon – is bringing in less money each year. That means both state and local governments have less money to repair, maintain and build highways, roads and streets.

The choice is difficult but clear: Raise taxes (or user fees), spend less money on roads or, most likely, a combination of both.

Of course, no one wants to see taxes go up, least of all politicians responsible for increasing them. Indeed, state legislators are loath to raise taxes but would be happy if county governments did. Similarly, county officials across the state want to hold the line on local taxes and believe the state should find the ways to provide more money.

State Rep. Jeff Espich of Wells County, the Republican House expert on budget issues who is retiring this year, has long called for indexing the gasoline excise tax to inflation, allowing for regular but small increases. And in retrospect, after agreeing to lease the Indiana Toll Road for $3.8 billion, legislators could have changed the formula on distributing the excise tax revenue to provide more to local government and less to state government, which received the bulk of the lease proceeds.

Now, with the amount going to local governments dropping by 15 percent – more than $40 million – in six years, it’s doubtful Hoosiers could accept an increase in the gas excise tax high enough to make up the difference.

Yet not taking care of the most heavily traveled roads simply isn’t an option. Hoosiers would be best served if officials approached the problem on several fronts. Among the possibilities:

•State lawmakers could eliminate the sales tax on gasoline or designate a certain percentage of it for roads. Yes, the state would lose about $500 million a year that goes toward the general fund – requiring spending some of the state’s ample surplus and further budget cuts. But eliminating or cutting the sales tax on gasoline could allow an increase in the excise tax without costing motorists even more.

•Counties have to do their part, too. Only about half of the state’s counties have adopted a wheel tax – effectively, a local tax on motor vehicles. Allen and some other counties don’t have a property tax-financed cumulative bridge fund. They should, especially in Allen, which has a healthy surplus of its own.

•Inexplicably and with little attention, at some point in the past lawmakers decided to divert some of the excise tax revenues from direct spending on road projects to the administrative expenses of running the Bureau of Motor Vehicles, the Indiana State Police and the motor tax unit of the Department of Revenue. That took $127 million away from road projects in 2011 alone. Lawmakers should consider reducing or eliminating the excise tax revenue going to the BMV and state police, though, again, that would mean funding for those agencies must come from elsewhere or be cut.

None of the options are good. But all – or a combination of all – are better than allowing the most-used roads to deteriorate. The good part of the shortfall is that it is due to motorists using less gasoline because they have more fuel-efficient cars they are driving less often.

Bad roads reduce gas mileage and increase maintenance and repair costs on vehicle owners. They mean truck drivers and business travelers must spend more time on the road, raising costs for businesses.

Even tax increases will most likely be stopgap measures. As cars increasingly become more fuel efficient and more alternative fuels are used, revenues from the excise tax will continue to drop.

Bad roads or higher taxes? No one likes the choice, but it will have to be made.

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