In the waning hours of the regular session, Indiana state lawmakers were able to hammer out an agreement on a two-year, $1 billion transportation funding deal.
The short-term funding package does not increase fuel tax rates or other vehicle fees. Instead, the legislation sent to the governor’s desk on the final day of the legislative year relies largely on releasing surplus dollars to address infrastructure needs.
House and Senate lawmakers previously approved differing versions to raise revenue for state and local roads. Initially, the House backed a bill to raise fuel tax rates by 4 cents per gallon and index the rates to inflation, as well as seek a federal waiver to toll lanes on Interstates 65, 70 and 80/94.
The General Assembly’s agreed-upon package more closely resembles what the Senate and Gov. Mike Pence were pursuing.
HB1001 reroutes about $230 million from the state’s $2 billion budget reserve for state highways and bridges as long as the amount available at the end of the fiscal year is more than 11.5 percent. The surplus state revenue now is earmarked for automatic taxpayer refunds.
Another $100 million from the Major Moves 2020 Trust Fund will be tapped for maintenance and preservation.
Local governments came away the big winners with about two-thirds of the freed-up money. Communities across the state will divvy up about $254 million in excess reserves and existing sales tax on fuel to maintain and repair roads and byways.
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 is the creation of a task force to study a long-term road-funding solution that could include additional tolls.
Currently, the only toll road in the state is Interstate 80/90. Indiana also plans to charge users to use the I-65 bridge over the Ohio River into Kentucky.
“This bill is a fiscally responsible, strong step toward fully funding Indiana’s infrastructure needs,” Sen. Luke Kenley, R-Noblesville, said in prepared remarks.
The second part of the package, SB67, returns $430 million in one-time funding to local governments. The money comes from excess local income tax collections the state has been withholding.
Sen. Brandt Hershman, R-Buck Creek, said the shift is reasonable due to the current excess balance held by the state.
“(SB67) will immediately provide resources for local infrastructure improvements, which local governments around the state have identified as a top priority,” Hershman stated.
Local governments also have the option to raise local wheel and excise taxes.
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.
Rep. Scott Pelath, D-Michigan City, added that the Democratic minority is pleased with the deal that avoids new tolls and new taxes.
“We took a steady first step toward fixing our decaying roads and bridges.”
Republican leaders at the statehouse say the approved plan buys the state time to work out a deal for long-term transportation funding. Legislators are expected to take up the issue for consideration as soon as next year.
To view other legislative activities of interest for Indiana, click here.
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