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Indiana House Republicans outline tax plan for additional road funding 1/11/2017
1/11/2017, Indianapolis Star – Republican House leaders on Monday presented an ambitious plan to inject nearly half a billion dollars a year into fixing and building the state’s roads and bridges by hiking fuel and cigarette taxes.
But some members of their own party, including Gov.Mike Pence, contend raising taxes is a bit too ambitious.
“Governor Pence believes the last place to look when we have the best credit rating and $2 billion in reserves is in the pocketbooks of hardworking Hoosiers,” Pence spokeswoman Kara Brooks said.
Even Democrats pounced on the tax increase proposal.
“Right now, House Democrats aren’t convinced that we need to take any more money from Indiana taxpayers when we already have billions of their dollars squirreled away in the state treasury,” Democratic House Leader Scott Pelath-Michigan City, said.
HB 1001 would raise the fuel tax 4 cents a gallon to 22 cents and would transfer 4 cents of the 7 cents sales tax on fuels to generate an additional $1 billion over the next five years and beyond. It also would hike the cigarette tax by $1 per pack.
“This is responsible, comprehensive and sustainable,” Bosma said at a news conference Monday. “Hoosiers want investment in roads and infrastructure.”
The legislation also calls for studying the possibility of turning some freeways, such as I-65 and I-70, into toll roads, charging electric car owners a $100 yearly registration fee and allowing cities to charge a “wheel tax,” which is a charge of up to $25 on car registrations to help fund local projects. Counties already are allowed to assess the wheel tax, but only 49 out of 92 do so.
House Ways and Means Committee Chairman Timothy Brown, R-Crawfordsville, said the gas tax hasn’t been raised since 2003. He characterized the measures as mostly user fee increases.
“This is a fiscally responsible plan that takes our immediate and future infrastructure needs into account,” Brown said.
Brown said his constituents, including civic leaders and local lawmakers, have been clamoring for better roads and highways. The average driver in Indiana spends $120 on fuel taxes annually but $360 dollars on extra car repairs because of damage caused by poor roads, he said.
“I’m one of those who spent money on repairs,” Bosma quipped. “I hit two potholes last year: one on the highway and one on local roads.”
The lawmakers said finding long-term funding for roads is essential because gas tax revenues will decrease further in 2021 when vehicle gas mileage standards jump and fewer gallons are consumed. The recently passed federal transportation bill makes it easier for states to request permission to charge tolls, which lawmakers should seriously consider, Brown said. He said the average state derives 6 percent of its transportation funds from tolls while Indiana receives less than 1 percent.
Americans for Prosperity, an organization that favors efficient government and lower taxes, opposed the tax proposals, saying roads can be fixed with available state funds.
“Lawmakers don’t have to hike taxes to keep our roads and bridges in good repair,” said Justin Stevens, Indiana state director. “By responsibly budgeting and prioritizing roads and infrastructure in the state budget, lawmakers can make sure our transportation needs are well-funded without creating a larger burden for taxpayers.”
The House plan is at odds with one presented by Pence in October to earmark $1 billion toward road funds from a combination of state reserves, new bond money and a financial commitment from the legislature for additional spending. Pence’s plan calls for no additional taxes and would fund needed highway repairs for four years.
The Senate is scheduled to introduce the plan, Senate Bill 333, on Tuesday.
The surge of legislation follows a summer in which a 37-mile stretch of I-65 was shut down for a month because of a broken bridge and the Indiana Department of Transportation investigated 200 road construction projects for possible signs of early deterioration caused by incorrectly mixed asphalt.
Indiana spends less per capita than most states on highways and in 2014 dropped from 22nd to 36th among states, according to a survey done by a free-market think tank in California, the Reason Foundation.
INDOT spokesman Scott Manning said the agency faces an annual shortfall of about $250 million for needed repairs of highways, bridges and other transportation infrastructure.
Sen. Carlin Yoder, R-Middlebury, chairman of the Senate Homeland Security and Transportation Appropriations Committee, where the Senate bill will be introduced, criticized the House bill as “a knee-jerk reaction that indiscriminately raises taxes.”
“Our (Senate bill) doesn’t call for a ridiculous $1 cigarette tax,” he said. “I don’t know why smokers have got to pay for our roads. It’s getting old to use the cigarette tax as an easy target. Taxes should be paid by the people who use the service.”
The state cigarette tax of 99 1/2 cents per pack was last raised in 2007.
Tobacco Free Indiana praised the cigarette tax proposal, saying it would lead to a reduction in smoking and help pay the medical costs for smoke-related illnesses, diseases and death.
“With a statewide smoking rate well above the national average and with thousands of kids in our state becoming new smokers every year, it’s clear that Indiana needs to do more to fight back against tobacco,” said Monique French, chairwoman of Tobacco Free Indiana. “Evidence shows that regular and significant tobacco tax increases encourage smokers to quit or cut down their use and keep kids from ever picking up a cigarette.”
House Democrats announced their own $2 billion plan in November that used even more reserve funds than Pence’s proposal and would dedicate all 7 cents of the sales tax to roads.
“I note that the House Republican plan calls for a partial shift of the gasoline sales tax toward roads,” Pelath said in a written statement. “House Democrats already have a simple and responsible plan: every penny you pay at the pump goes toward fixing your state and local roads and bridges. Most Hoosiers are quite surprised that’s not the case today.”