Crumbling roads creep up as issue, gas tax revenues keep falling

The Journal Gazette (Ft. Wayne, IN)
By Niki Kelly
5/3/15

INDIANAPOLIS – Lawmakers tackled a lot of issues in 2015 but not the one plaguing Indiana’s roads, bridges and infrastructure: lack of money.

Instead, that will be the primary focus in two years as legislators must find a sustainable way to pay for state and local road needs at a time when fuel efficiency is going up and revenue from gas taxes is stagnating.

“Something that is overlooked is Indiana’s infrastructure is crumbling – almost to the point of becoming a crisis,” said House Democrat Leader Scott Pelath. “We cannot grow unless we have the circulatory system that allows businesses to move and remain here.”

Republican leaders agree – acknowledging that the road funding issue is the one disappointment of the just-ended legislative session.

Sen. Luke Kenley, R-Noblesville, said that if this was the education session, the next budget session in 2017 will be the road infrastructure session.

“It almost has to be. And that means we also have to face the actual problem of if we’re going to do more where are we going to get the money?” he said. “We’re going to have to talk about who pays what, in what form to support this. That’s going to be a tough discussion.”

Indiana’s gasoline tax is 18 cents per gallon and hasn’t been raised since 2003 – when it jumped 3 cents.

The state is getting about the same amount of money in motor fuel taxes as it historically has. But as consumers buy less gas because cars become more fuel efficient, it will be a problem.

Revenue from the state gas tax is expected to be about $600 million in 2015. Indiana also receives about $690 million in federal gas tax money.

Additional money goes to local units of government, which are struggling even harder to cover basic maintenance such as filling potholes.

For years, the state used proceeds from the $3.8 billion Indiana Toll Road to supplement projects. But when the revenue dropped off in 2013, it brought down Indiana Department of Transportation spending by about $300 million the next year.

In the 2014-15 state budget, lawmakers filled the gap by diverting a percentage of sales tax revenue from gasoline purchases to INDOT.

And they set aside $400 million over a two-year period to be used by INDOT for major highway projects. This came from General Fund dollars – aka sales and income taxes.

Lawmakers this year did the same thing – setting aside $200 million outside INDOT’s regular appropriation. It was cut in half due to lower-than-expected tax collections and increased competition for the dollars.

“We’re already talking about what happens next,” said House Speaker Brian Bosma. “We’re working on positive ways to make that happen for roads, bridges and other infrastructure.”

A number of ideas exist to tackle the declining road dollars. One is to raise the gas tax. Each cent brings in about $30 million a year, and the trend is expected to go downward.

Lawmakers could raise the tax, and another likely discussion is to insert an automatic accelerator tied to inflation so the tax rises on its own in the future.

INDOT officials provided models on how much revenue would be created by attaching the gas tax to various measures of inflation. The state’s models showed that revenue would be between $120 million and $200 million more annually.

Other suggestions are to increase license plate fees and to create a system of taxation based on how much drivers use the roads.

According to a MoneyWatch article, at least 18 states have considered taxing motorists by how far they drive. Next year, a pilot program in Oregon will help measure the feasibility of such a tax.

Oregon is finding 5,000 volunteers to pay 1.5-cents-per-mile tax instead of the 30 cents-per-gallon gas tax. Devices will report their mileage to the state. Nevada, Washington, Minnesota and California are trying smaller pilot projects.


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