More taxes and fees that will hit truckers hard in Indiana are on the verge of becoming reality. Toll roads are likely in the not too distant future.
The Indiana General Assembly voted on Friday, April 21, to approve a bill that once fully implemented will raise nearly $870 million annually for state roads and bridges and about $340 million for local work.
Legislators tout the funding plan as helping address the $2 billion annually needed for transportation work over the next 20 years. State roads need $1.2 billion per year, and local roads need about $775 million.
Both chambers initially approved differing versions of the bill. A conference committee made up of select members from each chamber worked to iron out their differences on the plan approved by lawmakers shortly before they adjourned for the year.
House lawmakers passed it on a 69-29 vote. The Senate followed suit on a 37-12 vote.
Consensus on the bill’s provisions clears the way for the funding proposal to move to Gov. Eric Holcomb’s desk for his signature.
“This plan provides the tools necessary to maintain what we have, finish what we started, and invest in the future,” Holcomb said in prepared remarks.
The Owner-Operator Independent Drivers Association says despite various changes made to the final version of the bill there remains cause for concern for trucking businesses operating in Indiana.
One issue highlighted by the Association is a component of the bill that permits the governor to pursue tolling of certain portions of interstates.
Previous versions of the bill simply removed from statute a requirement for the General Assembly to authorize tolling. The final version added some oversight by the State Budget Committee.
The Association has communicated to Indiana legislators, and the governor, the concerns of its 4,630 members residing in the state.
OOIDA Director of State Legislative Affairs Mike Matousek said it remains unclear what, if any, oversight the General Assembly will have regarding toll roads.
Matousek added that the state’s decision more than a decade ago to lease the Indiana Toll Road was a disaster. He said the 2005 law and lease agreement were seriously flawed, projections were overstated, toll rates for trucks nearly tripled, and the company running the toll road later filed for bankruptcy.
“We thought the state learned its lesson.”
Rep. Ed Soliday, R-Valparaiso, said that in order for the state to fully address its transportation needs adding toll roads is necessary.
HB1002 also requires the Indiana Department of Transportation to study tolling and submit a waiver to the Federal Highway Administration to allow tolling on existing interstates.
Sen. Brandt Hershman, R-Buck Creek, said during recent discussion on the bill that motorists would be responsible for paying up to 5 cents per mile. Commercial vehicles would pay as much as 15 cents per mile.
OOIDA says tolling infrastructure that was constructed and maintained by tax dollars is fundamentally wrong.
Another concern highlighted by the Association is a proposed weigh-in-motion pilot program to privatize certain aspects of commercial vehicle enforcement.
“The first-of-its-kind program will incentivize enforcement for profit, eliminate due process protections, and is a strong deterrent for law-abiding motor carriers to operate in Indiana,” Matousek said.
Also included in the final version is a plan to raise the state’s 18-cent-per-gallon gas tax by 10 cents. The 16-cent diesel rate will also be increased by 10 cents. In addition, the state’s 11-cent surcharge tax on diesel will nearly double to 21 cents.
All tax rates will also be indexed on an annual basis. Annual adjustments will be capped at one penny.
In addition, the diesel surtax will be collected at the pump instead of through quarterly tax filing reports. The change is expected to result in at least $20 million more per year from truck operations, according to a fiscal impact on the bill.
Supporters say that truck drivers will pay the biggest share of taxes.
“The typical owner-operator will pay $2,000 a year (in state fuel taxes),” Rep. Mike Braun, R-Jasper, said last month during House floor discussion.
Soliday said the IRP fee increase will amount to a 25 percent increase.
“It’s a stiff price. We understand that,” Soliday said. “We do need to have some form of compensation for those folks who do not stop in our state for as much as a Snickers bar.”
Sen. Jean Leising, R-Oldenburg, voted against the legislation. During recent floor discussion she said the CEO of a trucking company in her district indicated the company plans to move out of state if IRP fee increases are enacted.
“I know nothing about (the IRP). I’m going to be the first to admit it,” Leising said. “Other than to tell you it’s going to cost jobs and potentially a lot of local tax to my district, because if they move their trucking to Tennessee, then obviously their trucking location in my district will be vacant.”
The measure also shifts the 4.5-cent state sales tax on fuel from the general fund to the State Highway Fund. The shift of about $350 million annually will take place over five years beginning in 2020.
“By 2025, every penny paid at the pump will go directly to roads,” House Speaker Brian Bosma, R-Indianapolis, said during a press conference.
Also, the sales tax collected on diesel fuel purchases will be removed.
Hershman said the administrative “headaches” associated with collecting the tax outweighs the benefits of revenue collected.
“Because we are raising the excise tax and some other taxes we felt this was, in the interest of efficiency, a pretty good swap.”
Fees will be implemented for most personal vehicles. The revenue will be used to support local road projects.
In addition, a $150 annual fee will be added on all electric vehicles registered in the state. Owners of hybrid vehicles will pay $50.
Removed from the final version was a $5 tire fee. The fee was estimated to raise $30 million per year.
OOIDA said collection of the proposed fee had no chance to generate as much revenue as projected. Truckers simply would have gone elsewhere to buy tires.
Another revenue enhancer taken out of the final version called for a $100 commercial license plate fee. It was estimated to raise $39 million annually.
The Association said the fee based on weight essentially would have amounted to a tax on a tax.
All tax and fee increases included in the final version are slated for implementation on July 1, 2017.
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