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The Journal Gazette

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Thursday, April 20, 2017 1:00 am

general assembly

Road funding proposal 'historic'

Shift of gas tax funds would be phased in

NIKI KELLY | The Journal Gazette

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

But the proposal still must get the seal of approval from the party 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 Senate President Pro Tem David Long of Fort Wayne. “We are not kicking the can down the road and dumping the problems on our kids and grandkids. We're stepping up.”

The plan calls for gradually shifting revenue collected in sales tax on gasoline to a special transportation fund. The shift would occur over five years beginning in 2020, but an escape hatch would allow the governor to object if the funds are unexpectedly needed for health care, schools or child abuse services.

About a third of gasoline sales tax revenue already pays for roads, and the rest goes toward 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,” House Speaker Brian Bosma said. “This will be the strongest road investment in our state's history, which I think is monumental.”

Lawmakers have said roads need 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 in 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 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.”