Republicans Show No Signs of Moving for Gas Tax Cut

Indiana Republicans aren’t showing signs of putting the brakes on rising state gasoline taxes even as the state government continues its streak of fast-growing tax collections.

Motorists in Indiana are now paying about 56 cents per gallon in state taxes on gasoline — the highest-ever level shown in state records — and it will increase next month based on rising fuel prices.

Democrats have been calling over the past week for Republican Governor Eric Holcomb to issue an emergency order suspending the gas tax or for the GOP-dominated Legislature to do so when lawmakers hold a one-day meeting next week.

Republicans shrugged off a push in March by Democrats for a gas tax suspension projected to cost about $125 million a month as national gasoline prices surged past $4 a gallon after the Russian invasion of Ukraine.

Republican legislative leaders argued that much of the gas tax money was dedicated to the state’s highway construction program and they, instead, pushed through a plan for gradually cutting Indiana’s individual income tax rate over the next seven years.

Indiana’s average price hit $4.60 for a gallon of regular as of Wednesday, according to AAA.

Democratic Rep. Tonya Pfaff of Terre Haute said a gas tax suspension would be in “the best interest of Hoosiers” and that “where there’s a will, there’s a way.”

“A windfall of excess funding has left Indiana in a position to provide real relief without sacrificing funding to important roads and construction projects,” Pfaff said. “The time to act is now.”

Overall state tax collections have continued surging in recent months, reaching $1.8 billion, or about 12%, more than a year ago in fiscal year revenue through the end of April. That could push the state’s cash reserves from the record $3.9 billion set last year to about $6 billion when the budget year ends June 30.

Holcomb maintains he doesn’t have the authority to suspend the gas tax as Democratic Governor Frank O’Bannon did in 2000 because of changes since then to state law.

“For an Indiana governor to suspend the gas tax through a declaration of an energy emergency, the state must have an existing or projected energy shortfall that would jeopardize life, health and property,” Holcomb said in a statement. “We have not met that threshold.”

Indiana has two taxes on gasoline — the 7% state sales tax and a tax directed to infrastructure projects.

The sales tax charged at the pump is calculated monthly and stands at 24.1 cents a gallon for May. That’s double from early last year and could jump at least another couple cents for June.

The road projects tax that’s currently 32 cents a gallon is set to go up by 1 cent in July under an automatic increase for inflation allowed under the 2017 plan pushed by Republicans that boosted the tax from 18 cents to 28 cents.

The governor’s office did not comment on the requests from Democrats that he call a special legislative session so that lawmakers could take action on the gas tax.

Legislators have a one-day meeting set for Tuesday, during which they are expected to vote on overriding Holcomb’s veto of a bill banning transgender females from participating in girls school sports. Lawmakers, however, can’t take action on other issues without the governor’s authorization.

Neither Republican House Speaker Todd Huston nor Senate President Pro Tem Rodric Bray responded to requests for comment on the gas tax.

Rep. Greg Porter of Indianapolis, the top Democrat on the budget-writing House Ways and Means Committee, said the state has more than enough money available to provide gas tax relief.

“It is time to answer our moral and legal obligation to use taxpayer dollars responsibly while providing real relief to hardworking Hoosiers,” Porter said.