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The Journal Gazette

Wednesday, April 19, 2017 6:40 pm

Shift in gas tax funds will boost spending for roads

NIKI KELLY | The Journal Gazette

INDIANAPOLIS - A long-term road funding deal forged by Statehouse Republicans would mean about $870 million in new dollars for state roads and $340 million for local infrastructure by 2024.

But the proposal still must get the seal of approval from the respective caucuses and be voted on in both the House and Senate.

"It's a historic plan that recognizes states have to take care of their own problems," said Fort Wayne Senate President Pro Tem David Long. "We are not kicking the can down the road and dumping the problems on our kids and grandkids. We're stepping up."

The plan would start shifting revenue collected in sales tax on gasoline to a special transportation fund in 2020 and finish five years later. But there would be an escape hatch for the governor to object if the funds are unexpectedly needed for health care, schools or child abuse services.

About a third of gasoline sales taxes already pay for roads and the rest funds the overall state budget.

By phasing in the shift the state avoids a hit on the next two-year budget and lawmakers don't need to raise cigarette taxes to fill the gap. It ultimately means an additional $350 million for roads.

"We believe we have met our mutual goals of long term, comprehensive road funding," said House Speaker Brian Bosma. "This will be the strongest road investment in our state's history, which I think is monumental."

Lawmakers have said roads needs an average of between $1 billion and $1.2 billion in new funding over the next 20 years.

The bulk of that will come from a 10-cent increase of the state gas tax, which hasn't been raised since 2003. That tax also will have an annual automatic inflationary-adjustment.

Revenue from the gas tax increase would be about $155 million starting in 2018 and rise each year after that. A fiscal impact statement from earlier this session said it would hit $355 million in 2021.

There are other annual fee increases - a new $15 vehicle registration fee; a $150 fee for electric cars and a $50 fee for hybrids. The final plan removed an unpopular tire tax.

Long said the bill also explores tolling options, and requires INDOT to study tolling and present a strategic plan to legislators next year.

"Tolling is clearly a part of this long term solution for every state and the federal government," Bosma said. "We'll probably have a discussion about that in six or seven years."