I am not recommending (a gas tax increase) at this time and probably not for quite some time, if ever.
– Gov. Mitch Daniels, announcing Major Moves, September 2005
Revenues (for maintenance) are needed and we’re going to be challenged.
– Michael Cline, state transportation commissioner, November 2012
Bottom line: Major Moves ran out of money two years early, and Hoosiers will pay for it one way or another.
Since Daniels launched his 10-year road program in late 2005, most of the attention has been on new highway projects. And Daniels delivered – with major progress or completion of vital projects that include the Interstate 69 extension; U.S. 31 improvements; the U.S. 24 Fort-to-Port project; and the last leg of the Hoosier Heartland Corridor, Indiana 25 from Logansport to Lafayette. But Major Moves also included $5.2 billion to maintain roads the state already had, money that was to come from existing revenue while the Indiana Toll Road lease helped pay for the new roads.
Daniels did not have to recommend a gas tax increase, but it doesn’t appear Indiana will be able to keep that tax flat even for the duration of the Major Moves plan. Now, the maintenance well has run dry, and Hoosiers either will have to pay more to state government or incur the costs of additional time as well as lower auto mileage and repairs from driving on rougher roads. Most likely, it will be a combination of the two.
Granted, Daniels had no way of foreseeing in 2005 that recession combined with higher gasoline prices would cause Hoosiers to drive less and do so in more gas-efficient vehicles. Less gasoline purchased means less gasoline tax revenue – a projected 25 percent drop from $4 billion in the current two-year budget to $3.1 billon for fiscal years 2014 and 2015. Indiana will need at least $200 million more a year to maintain its highways, Cline, the head of the Indiana Department of Transportation, told members of the State Budget Committee.
Some of the ideas discussed will come as no comfort. One is increasing license plate fees. Another is simply raising the gasoline excise tax, which now stands at 18 cents per gallon. Worse, committee members and administration budget officials discussed the possibility of indexing the gas tax to inflation – allowing tax increases without lawmakers ever again voting for or against.
One idea with potential but probably not yet ready to put in place: Placing some type of mileage trackers in autos and basing a tax on miles driven, a measure that could reduce the incentive to drive more fuel efficient vehicles.
But lawmakers have other worthy options. One is directing part of the sales tax collected on gasoline to roads, though that would cause shortfalls in other portions of the budget. Another – one that should be taken eventually if not sooner – is ending the practice of using gasoline excise taxes to finance the state police and Bureau of Motor Vehicles. Gas tax revenue should go to roads.
Some increase in the gas excise tax seems likely – Indiana’s is lower than surrounding states. And the revenue shortfall is greater than the $200 million a year facing INDOT. Cities and counties have also seen their shares of gasoline tax revenue drop, requiring them either to delay maintenance or turn to other taxes for street repair.
With 69 years to go on the Toll Road lease, it’s disappointing Hoosier motorists will likely have to dig deeper into their pockets so soon to take care of roads. But it does appear inevitable.