Transportation funding at a crossroads in Indiana, U.S.

The state is not collecting enough in gasoline taxes to adequately maintain its roads and bridges

IndyStar.com
By Maureen Groppe, Star Washington Bureau
9/7/15

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 mgroppe@gannett.com. Follow her on Twitter: @mgroppe.)


Comments

Transportation funding at a crossroads in Indiana, U.S. — 2 Comments

  1. The Transportation Alternatives Program (TAP) uses 2% of the federal Highway Account for trail development and other non-highway purposes. For FY 2015 this is $820 million.

    Trail development should be solely funded by state and local community $$$, if at all.

    Rails-to-Trails, the leading advocate for trails in the nation, has 160,000 members and supporters and is aggressively lobbying for the continuation of the TAP. 44% of rail-trails in the U.S. have been built with federal support and more than 8,000 miles of former rail corridors “are waiting to be turned into great trails,” according to Rails-to-Trails.

    In July a Senate amendment was introduced to eliminate the TAP. You can be sure that this advocacy group is being heard on this matter. If you do not support TAP have you let Donnelly, Coats and your U.S. Representative know?

  2. Several of 63 postings/replies from IndyStar Facebook posting of this article:

    David Vavrek – Indiana roads are some of the worst in the nation.

    Gwendolyn Aishe – They are terrible. We traveled a lot this summer and when we got back to Indiana we could tell how bad ours were vs other states.

    Cindy Zickmund Draper – A good leader would have a plan for this. It did not happen yesterday. The republican’s control the House and Senate at both the state and federal level need to show us how they can lead. All we see on the news is republican’s talking about Kim Davis and Planned Parenthood, but some of us noticed that they were only able to pass a 3 Month transportation bill. Lame, Lame, Lame.

    Greg Powell – I don’t understand how there could be a “shortfall” in funds of any kind. The over pricing of gasoline since 2008 and all of the additional sales tax money collected on those higher prices should have more than compensated for any shortfall in federal funding. Local government just did not anticipate a “short fall” and thought they had “blow” money..so they spent it elsewhere. This is just an excuse to raise gas tax while the price of gas has dropped to an acceptable level and we the consumer will just think “OK” because we have paid higher prices in the past. We really are that stupid aren’t we?

    Rick Klapak – When the governor and the legislature can turn down millions of federal dollars for preschool education, spend $2 million to try and fix their screw-up with RFRA, spend $440/hr for an attorney to block public access to records under the freedom of information act, spend $250K on one trip to Japan and brag that they have +/- $200 million in reserve fund, I don’t think the problem is tax revenue. The problem is their priorities in spending.

    Ryan Hobbs – I find this hard to believe, everything we do we are taxed sometime. 3-4 times. Alcohol cigarettes property tax social security wheel tax sales tax plate tax income tax state federal property tax gas tax. Seems to me that if they cant do their jobs someone aught to take a pay cut. And if they cant take care of the roads and bridges why did we just spend 3,000,000 dollars on an electric car program.

    Jonathan S. Cooksey – Why is it that Indiana is always reactive in solving issues? We are encouraged to drive small death-trap cars and then are penalized because we are saving fuel? TFB. I don’t want to hear about tax revenues not being enough. 4 Billion collected from the Toll Road and that’s not enough? We have a $2 Billion surplus? What are the morons in the State House doing ?

    Robert L Smith – BEing a driver who travels I 94 and I 80 thru northwest Indiana weekly,,,I’m here to testify,,,,INdiana Roads Suck,,,at least that stretch

    Michael Weber – If that’s all the more that needs to be paid to ensure the needed funding then do it. This really should not be a debate as the cost is so minimal. If our roads continue on the path they are we will lose our competitive edge as as distribution hub.

    Dee Anne Moore – Look in the pockets of the well connected groups and individuals who were involved with the construction of the lower leg of I-69 that very few wanted and many protested against for years. Daniels and Pence reaped benefits from pushing the construction of that environmental killer.

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