Sunday, July 16, 2017 1:00 am
Infrastructure plan wisely builds in an escape hatch
In April, to much-deserved acclaim, the Indiana legislature finally confronted one of the state's most pressing needs with a multifaceted plan to fix crumbling roads and bridges.
The centerpiece of the plan was the first increase in the state's gasoline tax since 2005. The legislature also specified all the sales tax revenue from gasoline would be shifted to infrastructure. This was a big change. Of the seven cents collected on a dollar's sale of gas, only about two cents had been devoted to infrastructure needs; the rest – about $300 million a year – had gone straight into the general fund.
To avoid leaving too big a hole in the general budget, the legislature decided to move the sales-tax revenue incrementally over the next seven years, pledging all of it would be devoted to spending on roads and bridges by 2024.
The race to rebuild the Crossroads of America is already under way. Thursday, Gov. Eric Holcomb traveled around the state to announce a $4.7 billion cornucopia of road and bridge projects, including a number in our area.
But as The Journal Gazette's Niki Kelly reported last week, lawmakers already edgy about the possible effect on the state of federal cuts in Medicaid funding also created a little-noticed escape hatch in their infrastructure plan.
From 2020 through 2023, some$235 million in gasoline sales-tax revenue will be funneled through the oddly titled Special Transportation Flexibility Fund. The “flexibility” is that the money will be spent on roads and bridges – unless the governor decides health care, K-12 education or child services needs the money even more. The legislature also took a pass on raising the tobacco tax now out of similar concerns about future revenue needs.
Those actions were prescient and prudent. Within a month after the legislature created the flexibility fund, the U.S. House debuted its first version of a Medicaid-slashing post-Obamacare bill. Thursday, the Senate unveiled its second version of the measure, and the plan still calls for drastic cuts to the federal funds that drive HIP 2.0 and other vital health care programs serving 1.4 million Hoosiers.
As a Medicaid-expansion state struggling with a monstrous drug crisis, Indiana may find itself among those states most challenged to make up for the drop in federal support. So it makes sense for legislators and the governor to be making contingency plans.
But how would Holcomb, or a successor, choose between road-and-bridge-funding projects essential to this state's economic development and the basic health care needs of its poorest and most vulnerable citizens?
Thursday, Holcomb told Kelly he is “laser-focused” on the infrastructure work, and he sounded confident that effort wouldn't be derailed by whatever comes out of Washington on Medicaid funding.
“Indiana will be in a good position to take care of our business on the health care front and the road construction front as we move forward,” Holcomb said. The state, he said, is “on solid financial ground. And we look forward to making sure that our health care delivery is the best it can be.”
Holcomb endorsed the House version of repeal-and-replace but has resisted weighing in on its impact here. The governor's confidence that the state can make it all work if federal Medicaid is slashed suggests he has a better contingency plan than diverting funds from other vital programs.
If so, in this moment of angst about the future of health care, he should share it with us.