The Indiana General Assembly didn’t pass long-term transportation funding during the 2016 short session, but it approved several bills allowing for diversion of existing and future collected tax funds from the local option income taxes reserves, general fund and gas use tax. These will provide:
- $330 million for local units of government in fiscal year 2016;
- $228 million for INDOT in fiscal year 2017
- $414 million for local units of government in fiscal year 2017;
- $68 million for local units of government in fiscal year 2018; and
- $105 million for local units of government in fiscal year 2019.
Counties can now double their wheel tax (raising an additional $286 million), and municipalities with a population of more than 10,000 may impose a wheel tax at their existing rate (raising an additional $90 million).
Lawmakers created a 16-member task force of legislators and gubernatorial appointees (including one recommended by Build Indiana Council) to analyze state and local road and bridge needs and long-term funding methods. The task force must present its recommendations to the State Budget Committee by January 1, 2017.
Lake, LaPorte, and Porter counties will see additional funding from revisions to local income tax laws, and Henry County plans to use a food and beverage tax for roads. Lagging farmland assessment values will decrease local tax revenues across the state.
Time & Material
Contractors selling non-tax exempt construction under a time and material (T & M) agreement or simply providing invoices including detailed labor, material, and equipment costs should consult with an accountant familiar with contract law and the new Indiana Code 6-2.5-4-18, Retail Transactions of Merchants. The new law is retroactive to January 1, 2007. Indiana Department of Revenue supported the bill to provide a legal basis for existing administrative code 45 IAC 22-3-9. The law states that contractor selling construction under a T & M contract must collect and remit the state gross retail tax.
Legislators adopted language that provides a specific legal basis for “named driver exclusions” that limit liability to the insured.
Lawmakers added a definition of “veteran” to Indiana’s small business code. For the purposes of qualifying as a veteran-owned business for set-aside government purchases, a veteran is any individual who is serving, or has served, in any branch of the armed forces of the United States or their reserves, the national guard, or the Indiana National Guard. The bill also removed the requirement that a veteran be a resident of Indiana for at least one year before making an offer to bid on a state contract.
Public Works Contracts
The public works contractor qualification requirement, adopted in 2015 and scheduled to go into effect on July 1 will now go into effect on December 31 of this year. Lawmakers added two new sections under State Public Works – Qualifications for State Public Works Projects and INDOT – Qualifications of Bidders for Contracts. Contractor prequalification is not required for public works contracts awarded by a local unit of government if
- The total estimated contract amount does not exceed $300,000;
- The public agency complies with Indiana Code 36-1-12 including bidding procedures, bonding and drug testing.
Local government units may not establish wage rates in a contract in a public works contract unless mandated by federal or state law.