Indiana needs a long-term road funding solution

Indiana is known as “the Crossroads of America.” Unfortunately, Indiana has an annual road and bridge maintenance needs funding gap of almost $1 billion.

A study by the Build Indiana Council, a consortium of more than 500 companies statewide, estimates Hoosier drivers pay an average of more than $350 a year in vehicle repairs due to the conditions of Indiana’s roads. Drivers are using Indiana roads to commute to work, visit family, and haul billions of dollars in goods.

The good news? The governor and state lawmakers made road funding a priority for the current legislative session. The bad news is they are taking very different approaches to address the problem and time is almost up.

Here the problem. The current Indiana fuel tax rate was set in 2003. Like nearly everything else in our lives, the costs of road repairs and construction have been increasing. But the main source of funding our road repairs, the fuel tax, has not kept up with the pace of inflation. Moreover, only a fraction of the sales tax also collected on fuel sales (which goes into the state’s general fund) is dedicated to building roads and bridges.

Now add to this equation vehicles are becoming more fuel-efficient and buying less gasoline. While that’s great news for our environment, it means the state is collecting less fuel tax revenue.

Gov. Mike Pence proposed a four-year funding plan that taps reserves and utilizes short-term financing to address major funding needs. The Senate backed this plan.

The House introduced a plan to increase road funding by about $880 million in its first year, and about $450 million annually on a long-term basis. To achieve these increases in funding, the House bill:

  • Implements a retroactive index on fuel taxes of 4 cents a gallon to restore lost buying power (a strategy the chamber supports)
  • Ties fuel tax rates to inflation
  • Directs excess general fund reserves to road funding uses at the end of budget year 2016
  • Shifts most of the sales tax on gasoline sales to road funding
  • Makes it easier for local governments to raise funds for local road projects

The Senate bill stalled in the House. The House bill is under consideration in the Senate where it was recently stripped of the 4-cents per gallon increase and inflation indexing. Instead, the Senate established a task force to further assess the state’s needs for road funding.

But will road construction costs go up or down in the future? Will vehicles become more or less fuel efficient in the future?

The 2016 session is now in the home stretch. We greatly appreciate the General Assembly’s leadership on this issue. Any movement is positive movement at this stage, but another study is probably unnecessary, given the amount of studies and commissions that have already looked at the State’s infrastructure needs in recent years.

Business and industry relies on efficient, safe transportation infrastructure to move supplies, product, and employees.

The Greater Greenwood Chamber, along with other chambers of commerce from around Indiana, supports legislative changes that will result in a long-term, sustainable funding plan for our roads, highways and bridges.

Let’s not put off difficult decisions to 2017. We encourage our elected leaders to pass a comprehensive and sustainable plan to address our budget shortfalls now and well in the future.