Indiana governor signs $1.2 billion funding plan for roads, bridges

By Keith Goble, Land Line state legislative editor | 3/24/2016

Indiana Gov. Mike Pence signed into law on Wednesday, March 23, a two-year, $1.2 billion transportation funding deal.

The short-term funding package does not increase fuel tax rates or other vehicle fees. Instead, the first part of the package relies largely on releasing surplus dollars to address infrastructure needs. The second part taps existing tax revenue.

“These bills make clear our commitment to further improving the Crossroads of America and will spur economic development projects and improve the quality of life in regions across the state,” Pence said in prepared remarks.

HB1001 reroutes $228 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 pavement and bridge 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 $277 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 16-member 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 drivers to use the I-65 bridge over the Ohio River into Kentucky.

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.

The new law includes a mandate to spend at least 75 percent of the money on roads.

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.

Republican leaders at the statehouse say the new law 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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