BIC Matters – Legislators Pass Road Funding Bill

(The following is based on BIC’s analysis of information available at time of passage. Estimates may change as additional fiscal calculations become available.)

Indiana legislators have passed road funding legislation and it now heads to the Governor’s desk, where he is expected to sign it.

HB 1001 includes the following provisions (note that FY 2017 begins July 1, 2016):

  • Directs about $230 million additional state excess surplus funds to INDOT in FY 2017 to be used for preserving and reconstructing existing state highways and bridges.
  • Redirects $100 million (already approved by last year’s legislature) from an INDOT fund restricted to major expansion projects to the state highway fund and restricts INDOT’s use of these funds to preservation and reconstruction of existing roads and bridges.
  • Establishes the local road and bridge matching grant fund. In FY 2017 allocates a share of the excess state surplus to this fund (estimate $180 million). In FY 2018 directs one cent (1/7) of the gas use tax (sales tax on gas) to the fund and in FY 2019 this increases to 1.5 cents (estimated to be $105 million per year by FY 2019) and continues at that rate into the future. To apply for a grant, locals must use an INDOT approved transportation asset management program. Locals must provide matching funds from revenues attributable to: newly enacted surtax/wheel tax rates; special distribution of local option income taxes (see SB 67 below); or rainy day funds. Fifty percent of the local matching grant funds are reserved for locals in counties of less than 50,000 population. INDOT administers the local matching grant fund. The grant program can fund either repairs or increased capacity projects.
  • Authorizes municipalities with over 10,000 population to enact the surtax/wheel tax.
  • Doubles the maximum allowable rates for the county-enacted surtax/wheel tax.
  • Creates a sixteen-member task force made up of legislators and gubernatorial appointees (including one member appointed by the Governor after considering the recommendation of the Build Indiana Council) to thoroughly analyze state and local road and bridge needs and long-term funding methods. The task force is to present its plan and recommendations to the state budget committee by January 1, 2017.

Another bill (SB 67):

  • Releases back to local units $430 million in already-collected local option taxes that have been held in reserve by the state. Directs 75% of these funds to be used for road, bridge, or airport improvements or deposited into the rainy day fund.

While the provisions outlined above are not as comprehensive and long-term as originally outlined in the House Republican version of HB 1001, the compromise represents the most progress that could be made given the reluctance of the Governor and Senate Republicans to increase taxes in an election year.

We have been assured by House and Senate leaders that they have a sincere desire to address this issue on a long-term basis in the 2017 legislation session. The workings of the Task Force over the comings months will help to ensure the issue is addressed next year.

We thank House Speaker Brian Bosma, Ways and Means Chairman Tim Brown, Roads and Transportation Chairman Ed Soliday and many House Republican Caucus members for their leadership and support. They took hard floor votes on tax increases twice this year and continued to advocate for long-term solutions. Meanwhile, we appreciate Senate Republican leaders for their promise to address the issue next year.

Many thanks to all BIC members and road funding advocates for your grassroots efforts during the legislative session.  Also, a big thanks to our lobbying team for their hard work on BIC’s behalf. BIC’s efforts to achieve long-term, dedicated and stable road funding solutions to address the full $1 billion per year need will continue through the rest of this year in preparation for the next legislation session.

If you have any questions, please call BIC at (317) 634-4774.