The state is not collecting enough in gasoline taxes to adequately maintain its roads and bridges
By Maureen Groppe, Star Washington Bureau
WASHINGTON – Are you willing to spend $6.62 more a month in federal gasoline taxes to get the nation’s roads and bridges in good condition?
How about spending $5.50 a month more just to keep transportation infrastructure from deteriorating below its current “D” rating?
Or would you pay an extra $2.50 a month to get Indiana’s gas tax back to the buying power it had when the tax was last raised in 2003?
The federal and state shortfall in transportation funding has been accelerating for years, and decision-makers are at a crossroads. The importance of the issue was driven home recently by the closure of 37 miles of I-65 because of an unstable bridge.
A blue ribbon panel created by Gov. Mike Pence to study the issue used phrases such as “grim picture” and “revenue is not sustainable” in its report last year.
Indiana, which already spends less per capita than most states on highways and transit, is not collecting enough gas taxes to adequately maintain its roads and bridges, much less pay for the new projects the state deems a priority.
And this is despite the nearly $4 billion infusion in transportation funds the state received from leasing the Indiana Toll Road in 2006.
At the federal level, the Highway Trust Fund — which disburses most of its funding to states — hasn’t collected enough gas taxes to meet its obligations for the past five years.
With Congress gridlocked over how to raise new revenue, lawmakers have raided the general fund and relied on 34 short-term funding bills since 2009 instead of the multiyear bills it used to pass. The latest temporary measure runs out in October.
The uncertainty of federal funding has been one of the state transportation department’s biggest planning obstacles. But the state has its own funding issues.
Indiana is one of 21 states that have not raised the gas tax in more than a decade, even as revenues have declined in recent years.
While the Indiana Department of Transportation is preparing a study of funding options for the General Assembly to consider, the state has tapped the general fund to supplement revenues coming from the gas tax and other user fees.
After construction to widen a section of I-65 near Lafayette caused the bridge instability that halted northbound travel for a month, Pence said he would consider dipping into the state’s reserves for another short-term funding solution.
“If you’re going to be the Crossroads of America, you better have the roads to back it up,” Pence said last month.
Transportation plays key role
Almost two-thirds of the U.S. population is within a day’s drive of Indiana. And Indiana ranks high among states in the size of its truck transportation industry — key to delivering the manufactured goods and agricultural and mining products produced in the state.
An INDOT report on future needs called freight transportation infrastructure critical to Indiana’s economy.
“It’s an economic advantage that we create, and it does become one of the reasons companies, particularly in manufacturing and logistics, want to be in Indiana. And that drives jobs and investment,” Ellspermann said.
Yet while Indiana bests most states in the number of miles traveled on its roads, it has been slipping on funding and performance.
Conditions are expected to get worse.
Like the I-65 bridge over Wildcat Creek that was being repaired and reopened Sunday, most of the state’s bridges were built in the 1960s and have a projected 75-year life span.
Indiana ranked sixth from the bottom in per capita state and local dollars spent on highways and transit from 2008 through 2012, according to the Pew Charitable Trusts. That made Indiana more reliant on federal funding than most states, getting 37 percent of its transportation spending from Washington, compared with the national average of 25 percent.
Nationwide, the country is spending half as much on infrastructure as a share of the economy as it did in the 1960s, when much of the interstate system was built. The United States spends about 2.4 percent of its GDP on transportation and other infrastructure, compared with about 5 percent in Europe and 9 percent in China.
The problem is the majority of transportation funding comes from federal and state gas taxes, which haven’t kept pace with the need.
Gas tax shortfall
The 18.4-cent federal gas tax was last raised in 1993. The 18-cent state gas tax has been in place since 2003.
Since then, cars have become more fuel efficient, reducing the amount of taxes paid for the miles traveled. The number of miles driven by Hoosiers also has declined in recent years.
But the main issue is the federal tax has lost 40 percent of its buying power and the state tax has lost 22 percent since they were last raised.
If the tax rates had been indexed to inflation, motorists would be paying the federal government 30 cents and the state 23 cents for every gallon pumped into their tanks.
INDOT estimates the average Hoosier pays about $18 a month in federal and state gas taxes, registration and other fees, compared with $50 a month for Internet service and $60 a month for cable TV. This is at a time when the average household is expected to spend less on gasoline this year than it has in more than a decade.
“Families today are spending a smaller share of their household budgets on gas taxes than they have in about three decades, and they are receiving a lower-quality transportation network in return,” according to a report from the Institute on Taxation and Economic Policy, a nonpartisan group that studies federal, state and local tax policy.
The Environmental and Energy Study Institute estimated in 2013 the federal gas tax would need to be increased about 12.5 cents — costing the average motorist $5.50 more a month — just to keep roads and bridges in their current condition.
If Indiana’s gas and diesel taxes had been indexed to inflation, the state would still have a funding gap, according to the Build Indiana Council, a coalition of construction trade associations. But the gap would be about half the size of the $1 billion the council estimates is needed in additional funding each year to adequately maintain state and local roads.
There are plenty of powerful interests backing a hike. They include the U.S. Chamber of Commerce, the American Trucking Association and the American Road & Transportation Builders Association.
Despite the fact that Republican Ronald Reagan and Democrat Bill Clinton raised the gas tax, no president since has backed an increase. GOP congressional leaders also are opposed, as is Pence.
“I don’t support raising the gas tax,” Pence said earlier this year. “Despite the fact that gasoline prices are low, we should be very cautious about looking to consumers in the first instance when there’s a way through greater flexibility and through reform that we can make those existing gas tax dollars go farther.”
Although Pence’s blue ribbon panel did not endorse a specific new source of funding, it did back the idea that funding streams should be indexed to inflation and should could come from some form of user fees.
But getting the public to go along likely will take some effort.
“There is a high appreciation for having good roads, whether you’re driving a 52-foot trailer or a tractor, or you’re a mom taking your kids to soccer practice,” Ellspermann said. “I don’t know that we’ve ever helped describe what a great deal we get for the several hundred dollars we each invest as Hoosiers each year to have access to these great roads. I think that’s an education part of this.”
(Email Maureen Groppe at firstname.lastname@example.org. Follow her on Twitter: @mgroppe.)