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The Journal Gazette

  • Associated Press House Speaker Brian Bosma, R-Indianapolis, right, talks with House Minority Leader Scott Pelath, D-Michigan City, on Wednesday at the Statehouse.

Thursday, January 05, 2017 9:39 am

Gas tax hike, new fees for roads

Niki Kelly | The Journal Gazette

INDIANAPOLIS – House Republicans laid out a road funding plan Wednesday that provides just a fraction of the money needed initially while relying heavily on tolling interstates in the future.

The initial new revenue would be about $300 million in fiscal year 2018 and would come from an increase in the state gas tax.

In fiscal year 2019, the new infrastructure revenue would rise to between $480 million and $541 million, according to fiscal estimates.

Separately, new fees on all vehicles in the state would be funneled to local roads.

House Speaker Brian Bosma said Republicans have given billions of dollars in tax savings to average Hoosiers – "not just the rich" – in the last decade.

"The next step is comprehensive road funding for the next generation," he said.

Lawmakers in recent years have cut individual income, corporate and inheritance taxes, which has cost the state coffers hundreds of millions a year in revenue. Some of those cuts are still being phased in.

Sen. Karen Tallian, D-Portage, said that at the very least, the state should stop further reductions from taking effect before asking Hoosiers to pony up new dollars.

"The whole thing doesn’t make sense," she said.

But Bosma denied that they are now asking the middle class to foot the bill for tax cuts for the wealthy, saying legislators have created a good tax climate for employers.

"This benefits every Hoosier who uses the roads," he said. "It makes a great deal of sense moving towards that user-fee concept."

The need for maintaining and improving state roads and bridges is about $1.2 billion a year on average over the next 20 years. But Bosma said the spending would ramp up slowly.

A large part of the new money would eventually come from tolling existing interstates, and House Bill 1002 would require the Indiana Department of Transportation to submit a waiver request to the federal government allowing such tolls.

Several states have a waiver but have not used it.

House Ways and Means Chairman Tim Brown, R-Crawfordsville, said the plan counts on between $500 million and $1 billion in new toll revenue starting in five to seven years.

Rep. Dan Leonard, R-Huntington, said he isn’t sure how his constituents will react to some of the ideas laid out.

"I think everybody would support more money towards roads. Nobody wants to pay for it," he said.

Leonard said everyone has dealt with vehicle repairs because of bad roads – front-end alignment or rims getting bent, for instance – and a 10-cent increase in the gas tax would offset that.

"I know it’s not going to be everybody jumping up and down and blowing whistles and horns, but I think constituents understand that we have to spend money to keep the infrastructure up," he said. "Our bridges quite frankly are in sad shape and need repair."

Indiana’s current gas tax of 18 cents per gallon and hasn’t been adjusted since 2003. The 10-cent increase would cost the average Hoosier motorist an additional $48 per year.

The plan also calls for indexing the gas tax for the future – which means adjusting the rate automatically every year based on inflation and Indiana personal income growth. Subsequently, the gas tax could rise gradually without lawmakers taking additional votes.

Another key part of the immediate plan is to dedicate all sales tax revenue collected on gasoline purchases to roads. That would blow a $288 million hole in the state budget, which currently relies on that tax revenue for general state expenses such as education and public safety.

Bosma said that shift would occur over a four-year period, but he acknowledged it does "place a lot of pressure on the general fund budget."

He said lawmakers are also crafting a new state budget this year and can deal with it then.

Another issue is that several House and Senate members have signed onto a national pledge against tax increases. Bosma and other Republicans are trying to differentiate between a general tax increase, such as on income or sales taxes, and a gas tax increase, which is more of a user fee.

"We have to work through that issue," Bosma said. "Some signed it many years ago, and it’s being held over their head like a blood compact."

The taxpayer protection pledge was arranged by a tax advocacy group called through Americans for Tax Reform.

Another group – Americans for Prosperity – came out against the plan Wednesday. It said Indiana would have the fifth-highest gas tax in the country under the proposal.

"With $2 billion in reserves, and another $1 billion in projected revenue increases, and only a small portion of gasoline sales taxes going to roads, it is time for legislators to make priorities," AFP Indiana State Director Justin Stevens said.