Time running out on Indiana roads, bridges funding solution

By Keith Goble, Land Line state legislative editor | 3/2/2016

In a battle of transportation funding plans in the Indiana General Assembly, House and Senate Republicans are playing switcheroo.

House lawmakers previously approved a $1 billion road and bridge funding package that relies largely on fuel tax increases, income tax rate cuts, and the possibility of tolls. At the same time, the Senate endorsed a $1 billion plan to tap existing revenues and borrowing to address infrastructure needs.

The push for more money to be applied to roads and bridges comes as state lawmakers have been unable to come up with funding sources as Indiana’s “Major Moves” initiative comes to an end. State officials have said that something must be done because money remaining from then-Gov. Mitch Daniels’ $3.85 billion lease of the Indiana Toll Road is mostly spent or due to be spent for specific projects.

A report commissioned by the state found that lawmakers need to approve about $1.5 billion annually to keep the state’s existing infrastructure in “good or fair” condition. The state now spends less than half that amount per year.

Despite the urgency to work out a deal the Republican-led chambers are struggling to compromise on a solution. To make matters worse, the clock is running out to get a deal done with the legislature scheduled to wrap up their work for the year as early as March 10.

The House and Senate approved separate plans early last month and have spent the weeks since converting each other’s legislation to duplicate their own. As a result, the stalemate continues.

House lawmakers have amended SB333 to raise the state’s 18-cent-per-gallon gas tax and the 16-cent-per-gallon diesel tax by about 4 cents, and index the taxes to inflation.

The existing tax rates raise $777.1 million annually. The proposed rate increases would raise an additional $280 million for roads.

The motor carrier surcharge tax would also be increased, as well as indexed to inflation.

Another provision in the bill would greenlight the state to seek a federal waiver to toll lanes on Interstates 65, 70 and 80/94.

Currently, the only toll road in the state is Interstate 80/90. Indiana also plans to charge users on the I-65 bridge over the Ohio River into Kentucky.

In addition, the bill redirects the sales tax on fuel over time to aid roads and bridges.

State law now allots the equivalent of one penny of the sales tax on fuel to the state highway account. The rest is routed to the state’s general fund.

Also included in the bill is a personal income tax rate reduction to be phased in over the next decade.

House Roads and Transportation Chairman Ed Soliday, R-Valparaiso, says the plan “is a data-driven solution to repair and maintain our state’s roads and bridges without creating financial burdens for future generations.”

House Speaker Brian Bosma, R-Indianapolis, added that the plan addresses immediate state and local funding needs while providing for long-term sustainability.

On the Senate side, HB1001 has been amended to reroute more than $240 million from the state’s reserve fund for transportation as long as the amount available at the end of the state fiscal year is more than 11.5 percent. The surplus state revenue now is earmarked for automatic taxpayer refunds.

The chamber stripped a provision that included an additional $240 million in borrowing. Instead, language was added to charge a $100 fee for all electric vehicles and a $50 fee on hybrid vehicles.

Senate lawmakers also included a provision from a separate bill to return $430 million in one-time funding to local governments.

Gov. Mike Pence backs the Senate’s plan as a solution that buys the state time to work out a deal for long-term transportation funding. The governor has also made it clear he wants nothing to do with the House-approved tax increases.

Leading lawmakers from both chambers now must meet in a conference committee to try to work out their differences before the session concludes next week.

To view other legislative activities of interest for Indiana, click here.

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