Legislature Maps Out Road Funding, Mulls Long-term Issues

Although legislators solidified Indiana’s transportation budget during the 2015 Session of the Indiana General Assembly, many note uncertainty looms in the future. While some Republican legislative leaders expressed disappointment about funding levels approved for construction and expansion projects, the bigger concern is a long-term issue: how to pay Indiana’s transportation bill for the long haul.

Lawmakers boosted infrastructure funding for state and local roads by more than $200 million in the 2013 budget; those levels didn’t increase, but remained the same for the most recent budget. Governor Mike Pence’s legislative agenda proposed investing $300 million in expanding sections of four-lane interstates, but was cut to $200 million; $100 million each year for the next two years.  

“The revenue forecast wasn’t where we wanted or hoped it would be,” says Indiana House of Representatives member Dr. Tim Brown (R-41). (LISTEN Brown1) 15112 TEMPLATE

Locating the dollars to both maintain Indiana roads and pay for future transportation infrastructure has left a big question mark surrounding financing. Of every dollar the state spends on roads and highways, the federal highway gas tax provides 40 cents, and state gasoline and diesel taxes provide the remainder. The problem, say critics, is those taxes have not been adjusted in as many as 22 years, resulting is a gradual erosion of purchasing power. The result is a funding gap; estimates are between $750 million annually to as high as $900 million.

Gas tax revenues have also been dwindling due to cars’ increased fuel efficiency and the growing prevalence of alternative fuel vehicles and electric models.

“As we go into this new century and new way of looking at energy, the gas tax is not a good user fee,” says Rep. Brown. “If the concept is still to have a user fee for our roads, we have to look at what user fee might be better instead of the gas tax. As fleet standards go up and cars become more efficient, we actually saw coming out of the recession less miles traveled; you usually see that go up after a recession.”

Solutions range from mild—such as adjusting taxes to inflation or consumer price indexes—to a complete overhaul of the system.

“There are lots of options that are being discussed around the nation; Indiana is in the same boat as the other 49 states on this issue, because federal gas tax dollars aren’t going as far as they used to,” says State Senator Luke Kenley (R-20). “The question will be, do you designate a special revenue source to achieve this—one which you’re not using at this point in time? Or will you just cut other funding programs in the state government and divert that to road funding? That will be the big question for 2017.” (LISTEN Kenley1)  15113

The Indiana Department of Transportation (INDOT) is working with a Massachusetts-based transportation consulting company to conduct a study to identify various funding options and their applicability in Indiana. Due out later this summer, the report will examine how various methods align with the state's future transportation needs. These options include tolling, sales tax on gasoline, gas tax, fees on vehicle miles travelled and indexing gas taxes.

“We’re also looking across the country at what other states are doing,” says Rep. Brown. “Just recently, Oregon started with the first analysis and implementation of miles traveled as a user fee.”

Some believe education eclipsed transportation in the most recent session, but legislators agree infrastructure will be the primary focus during the next two sessions—by necessity.

“We need to look at all the participants involved in road construction and maintenance and see if there’s a consensus as far as user fees,” says Rep. Brown. “There are lots of discussions about how we continue to move forward, and how we continue to keep Indiana the ‘Crossroads of America.’”